Bank of New York Mellon (BNY) Q3 FY26 earnings call: guidance and Q&A

How much is BNY spending on AI, what are the benefits, and how does it impact financials?

Robin Vince explained AI spending is integrated into the $4 billion annual technology budget, focusing on generating return rather than precise input measurement. He highlighted AI as a catalyst for transformational change, creating internal capacity, improving products, and enabling new client solutions. Scale benefits in AI token purchasing come from partnerships with providers and intelligent routing of models via Eliza.

“The first thing that matters when we measure how much we spend and we think about how much we spend is are we spending too much or too little? We don't need false precision around exact perfection. What we really need to understand is are we investing appropriate and are we generating return from that?”

asked by Mike Mayo · answered by Robin Vince

How will the platform and AI deployment benefit BNY over the next 1-2 years (client wallet share, new revenue pools, efficiency)?

Robin Vince stated it impacts client wallet share, new revenue pools, and employee efficiency. He framed AI benefits as: 1) generating internal capacity for growth, 2) improving products and features, and 3) enabling new client offerings previously uneconomical. He noted the evolution from capacity generation to product improvement and ultimately new client solutions.

“It's about all 3 of those. And you happen to have hit on 3 AI strategic vectors. And so I'll reframe them for you. The first one is generating internal capacity.”

asked by Ebrahim Poonawala · answered by Robin Vince

How does BNY protect against 'rogue agents' with widespread AI deployment, and what's the view on open-weight vs. closed models?

Robin Vince discussed the need for alignment and observability sciences to catch up with frontier model science. He noted open-weight models allow user customization but can bypass safety, emphasizing Eliza's role in wrapping safety protocols around AI capabilities and leveraging existing controls like maker-checker processes.

“I view the safety package of alignment and observability needing to catch up with the frontier, that's important investment and it has to happen.”

asked by Ebrahim Poonawala · answered by Robin Vince

What tangible benefits (unit cost reduction, cross-selling) should be expected from the platform operating model as users season into it?

Dermot McDonogh stated the firm is fully live, de-siloing capabilities, and delivering more value to clients, evidenced by 15 consecutive quarters of sales growth. He cited Securities Services' 36% margin as a result of model adoption and strategic tech investments, enabling cross-platform product delivery and reinvestment of efficiency gains.

“So we kind of think of platform operating model beside the commercial model alongside AI is a very, very compelling strategic opportunity for us in the forward.”

asked by Brennan Hawken · answered by Dermot McDonogh

What is the durability of collateral management growth, and what are the puts and takes of mandatory treasury clearing?

Dermot McDonogh stated central clearing is not a headwind, as it drives more platform volume. He attributed growth to rate volatility encouraging volume, international expansion, global debt issuance, and clients seeking funding solutions, leading to a record $8.3 trillion in collateral balances. He expects long-term positive outlook for the platform.

“So the last question first, central clearing. We believe we're going to earn our way through that. And so far, we've seen that because you see more volume on the platform as a result of the initiative.”

asked by Alexander Blostein · answered by Dermot McDonogh

How does BNY plan to improve NNA growth in Wealth Solutions, and can capacity constraints at other custodians help?

Dermot McDonogh highlighted $48 billion in NNA (7% annualized growth), new client logos, and multi-year contract renewals. He noted the business's strategic ambition, fresh leadership, and unified product delivery including separately managed accounts and long-short tax strategies, expressing pride in the 'new Wealth Solutions business'.

“First of all, I would like to kudos to the team for a really strong quarter in this space. $48 billion of net new assets. That's kind of a 7% annualized growth rate.”

asked by Alexander Blostein · answered by Dermot McDonogh

Is BNY pivoting to a growth mindset in Securities Services after achieving efficiency targets, and where are growth opportunities?

Robin Vince confirmed the pivot, stating the segment's pretax margin reached 36% (from 21% in 2021), driven by foundational work in operating and commercial models. He identified growth opportunities in new regions (e.g., Germany), new solutions (digital asset transfer agency), and capital markets activity, emphasizing the team is now attacking these opportunities.

“It was an expense self-help story in part, but you're right, we've done a lot of the foundational work. And it's really a microcosm of the same thesis as the whole company, which is having done the foundational work in operating model and commercial model, we can pivot and are pivoting more to growth.”

asked by Steven Chubak · answered by Robin Vince