State Street Corporation (STT) Earnings Call Transcript & Summary

Well, good morning, everybody. Thank you for being here. I'm pleased to be here today to share with you our 2024 strategic priorities. I'm going to get started with about 15 minutes of remarks, and then Eric and I will join Brennan and take questions. For today's discussion, I'll be referring to a slide presentation, which you should be able to see and available on our Investor Relations website. During today's session we'll make some forward-looking statements, and results could of course differ. I direct you to Slide 15 of today's presentation and to our SEC filings, which contain cautionary disclosures in this regard. And with that, why don't we get into it? At State Street, our purpose is to help create better outcomes for the world's investors and the people they serve. We spend a lot of time considering the strategy of our business and how to position each business to realize that purpose and drive growth. In recent years we have successfully demonstrated the power of our strategy even during the most volatile market periods, as we aim to be the world's leading investment servicer, provider of liquidity, financing and research products and investment manager for our clients with tech-led capabilities spanning the entire investment process and life cycle front to back. For example, the last four years included a global pandemic, the most extreme equity and fixed income market downturn since the global financial crisis, rapid inflation, the subsequent sharpest increases in global interest rates in decades and bank failures. We carefully navigated State Street through this period, executing against clear goals and an ambitious strategic agenda that resulted in us achieving three consecutive years of pretax margin and ROE expansion from 2019 through 2022. During that period, we generated our highest level of total revenue on record in 2022, all while investing in our business and containing costs for a multiyear productivity program that continues to bear fruit today. As a result, our 5-year total shareholder return was 44% at year-end 2023, ahead of the BKX and our direct trust bank peer group. Our financial results for 2023 were challenged by a host of factors, including sales performance in 2021 and 2022 arising out of COVID, lower client activity, the effects of declining equity and FX market volatility on our markets revenues in 2023. On the positive side, last year we exceeded our ambitious sales goals in asset services, launched new products in Markets & Financing and gained market share in a number of areas within investment management. We put in place a comprehensive set of tangible actions to drive strong financial results. As a consequence, we are well positioned for 2024 and beyond. As you can see on Slide 3, this year we have another clear set of strategic priorities with the goal of driving positive fee operating leverage in 2024, excluding notable items, while continuing to invest in the business and extend our competitive advantage. First, we plan to grow fee revenue by driving stronger back-office sales, differentiating with our State Street Alpha and private markets platforms, and leading with service excellence. Second, we aim to extend leadership in our Markets & Financing and Global Advisor franchises as we continue to build upon the progress made in 2023 and target product geographic footprint and distribution expansions in 2024. Third, we will continue to enhance and optimize our operating model as we embark on the next phase of our technology-led productivity efforts aimed at further advancing client service and operational excellence while lowering cost. And fourth, we continue to differentiate our business with innovative client solutions and the build-out of technology-led capabilities to support even further business growth. We organize State Street into two lines of business, which encompasses three key franchises, as you can see on Slide 4. Our Investment Servicing segment includes our asset services and Markets & Financing franchises that work closely together and is complemented by our Investment Management line of business, State Street Global Advisors. Each of these areas has a clear strategy and a number of projected key outcomes planned for 2024 that will help us to achieve the strategic priorities I just described and which I will now walk you through in more detail. Turning to asset services on Slide 5. Last September, we had outlined a number of strategic focus areas aimed at driving opportunities across key regions and product areas and realizing the full revenue and client impact potential of our front-to-back State Street Alpha value proposition. We are taking a number of actions aimed at improving our sales performance even further, differentiating our business through our unique Alpha and private markets capabilities and reinvigorating revenue growth through faster installations, while maintaining a strong revenue retention rate. We are particularly focused on driving further Alpha momentum and executing against our plan to improve our core back-office custody sales performance as it is our largest revenue pool, installs quickly, has significant scale and drives high-margin ancillary revenues. We have already made measurable progress, as you can see on this slide. We achieved our 2023 servicing fee sales target of $300 million and raised that target to $350 million to $400 million for 2024. If achieved, this performance should enable us to drive stronger organic servicing fee revenue growth over time. Turning to Markets & Financing on Slide 6. State Street -- I'm sorry, I want to make sure -- has a world-class markets offering and provides valued financing to our clients. The franchise aims to grow market share and to be a leading provider of liquidity, financing and research products to our clients globally. We are targeting mid-single-digit growth in our FX and FX services franchise through the cycle, resulting from innovative solutions, strong product capabilities and geographic reach, which is extending further into emerging markets currencies. The business is executing against a comprehensive set of focus areas, targeting growth through multichannel FX expansion, including electronic trading, product innovation and research, geographic and client expansion and expected loan growth facilitated by balance sheet optimization, as you can see on this slide. Turning to Slide 7. We made meaningful strategic progress and achieved market share and asset growth at Global Advisors in 2023, and we are aiming to build upon that success in 2024 across our ETF, institutional and cash businesses. We finished 2023 strongly and a number of key performance indicators make us optimistic about the future. For example, Global Advisors recorded its best-ever quarter of aggregate total flows in 4Q '23, including record quarterly flows within our SPDR ETF franchise, and ended 2023 with a record level of total ETF assets under management. We grew market share in key ETF segments, including U.S. low-cost equity and fixed income, and recently SPY became the first ETF to cross the $500 billion mark. Within our institutional franchise, we grew share in the U.S. Defined Contribution business and gathered positive overall net flows last quarter. Our cash business had an exceptional year in 2023, delivering record annual flows with institutional money market funds' share growing and achieving record AUM. As we look ahead, we have set for Global Advisors a host of ambitious targets for 2024 including gaining further market share in key areas within ETFs, institutional and cash, while also improving organic growth through stronger distribution and product innovation. While we have actionable business growth goals in 2024, we remain focused on the continued transformation of our expense base, which forms another important component of our strategy and path to expected positive fee operating leverage this year. Slide 8 highlights our expense outlook for 2024, which we expect will be the fifth consecutive year of business investments either fully or partially offset by productivity efforts and our ongoing program of expense transformation. We expect to make in excess of $1 billion of investments this year, an increase of around $400 million relative to 2023. We have a well-structured set of productivity efforts currently underway that we expect will fully self-fund these incremental business investments by delivering approximately $500 million of total productivity savings in 2024, equivalent to 1.7x the amount of savings we generated in 2023. Slide 9 provides a more detailed look at some of our achievements in 2023 and our focus areas of 2024 across both business investments and productivity savings. Beginning with investments, while we continued to meaningfully invest in our infrastructure, technology and resiliency last year, we also invested in modernizing our product platforms and built capabilities in a number of key growth areas. Over $1 billion in planned investments in our business include technology aimed at delivering longer-term growth in Alpha, private markets, upgrading our custody and payments technology platforms and Global Advisor investments, while also continuing to bolster areas such as resiliency and AI. Our multiyear productivity efforts are structured around three core pillars to transform our operational efficiency and support scale-driven business growth, including: one, simplify our operations; two, reengineer and automate processes; and three, optimize resources. Let me give you just a few examples of each pillar. To accelerate the simplification of our operations, last year we announced the rationalization of our operations in India. We assumed control of one of our India operation's joint ventures in 2023 and a second operation's joint venture consolidation is expected to close in 2Q this year. We expect that these consolidations, which were already in our expense base, will accelerate the transformation of State Street's global operations, improve service quality and client experience and enable us to generate multiyear productivity savings. Elsewhere, we are continuing our journey on rationalizing our technology infrastructure. We have a comprehensive catalog of initiatives aimed at reengineering and automating our processes. As just one example, bespoke processes are a key driver of cost and complexity. And last year, we reduced the number within our asset services operations by 7%, and we anticipate that we can eliminate further bespoke processes in 2024. We are also leveraging AI to improve our operational processes, and the technology is already creating change within our organization. For example, in 2023 we leveraged AI to digitize and automate approximately 85% of bank loan settlements. This year within our operations area, we have over 10 new AI initiatives planned. Finally, we continue to focus on optimizing our resources, including human capital. In 2023, we announced plans to streamline and de-layer staff functions. And in 2024, we will flatten our operations staffing structure and increase the management span of control from about 1.5 -- 1:5 today to a goal of approximately 1:8. To conclude, as we look ahead to 2024, we remain highly focused on the execution of a clear set of strategic priorities, backed by detailed action plans to drive growth across all three business areas. This is underpinned by a set of business investments paired with a comprehensive set of productivity initiatives aimed at driving longer-term improvements in our operating model efficiency and effectiveness and generating positive fee operating leverage in 2024. And with that, I'll join Brennan for some Q&A. Thank you.

Thanks, Ron, and thanks to both you and Eric for joining us today. Really appreciate it. Would love to start with the fee revenue growth outlook. So you're anticipating 3% to 4%. Curious how important -- and you had it as one of the slides so I'm guessing it's pretty important, but the $350 million to $400 million of servicing fee sales, right? How important is that? And what's the right way to think about how that metric actually translates into revenue? And then how do we think about the offset from the BlackRock transition and many -- maybe an update on that front, too?

Yes. Let me start, and Eric will pick up on the BlackRock transition. So if you think about our fee revenue, servicing fees makes up half of it. So that servicing fee sales number is actually really important to this. And that's why we spent so much time over the last couple of years working on it, upgrading the sales force, putting in new incentives, thinking about the -- reengineering the sales process from front to back, reflecting the kinds of business that we now operate in, particularly in State Street Alpha. So we felt we were in a spot last year, midyear, to put that target out there, which was very ambitious, certainly relative to anything we'd done before, achieved that and have put out another one. So it's very important, it's not everything, but if we don't get that, then we're not going to get that growth. Obviously then we have, following that, Markets & Financing. And there, a lot of work has been done in terms of trying to build market share, I mean ultimately, you're very much the subject of what's going on in the market as a result of volatility and everything else, but it's still very important to make sure that you're on the panel, that you're the one that's getting the call. And then finally, asset management would make up the rest of it. Asset management and then software. Now if you think about this, they have different growth rates. At the very high end, you've got the software businesses that are running at double digit. And we -- but given that servicing fees is half of the overall, we needed to get that up to a point where that's not -- not only is it not declining but it's actually growing. So -- hence, all the work we put in asset servicing sales.

And then maybe just to round off, Brennan, the previously announced client transition, I think two ways to think about it. First, on a quarterly run rate basis, we're about halfway through that transition, so we're well along. That's -- and on a fiscal basis, we've only seen about 1/4 of it. This coming year, as part of and incorporated in the 3% to 4% fee growth guidance that we've given, a little less than 1% headwind is embedded in that from that transition.

Got it. Okay. And look, Alpha has been a real game changer for you all, very impressive success. And in my business, I publish what I think, and I'm not always right, and I certainly was not right on the CRD deal as I was not a believer initially, but it's definitely worked out really well. So hats off in that regard. That said, can you discuss what you're seeing with clients as it relates to the Alpha offering? And how quickly do you think you can grow the existing 18 Alpha clients that are currently live on the platform today?

Yes. So 18 are live on the platform. 27 in total have been sold. So you've got -- the difference is the to-be-installed Alpha. And what we've said -- we added 7 last year, and what we put out there is that we -- our plan is to do 6 to 8 every year. So the way to think about the growth is in two ways. Obviously, if we deliver 6 to 8 every year, those are new clients or its additional kinds of services with existing clients. That's one important way. But the second way is that existing set of installed Alpha clients is also driving additional revenue itself, driving back-office revenue, it's driving Markets & Financing revenue, because the realities are that the proposition works better with the client the more we do with them, because it enables them to have really tight control over their data. The platform is interoperable, and we built it that way, because not every client is going to want to do everything for us, but it becomes very compelling for our clients to do that with us. So that's the way we think about that. Second thing I would say is that in this journey that you've followed us closely on, we have learned a lot, too, in terms of actually how we sell it. It's a very different sale than traditional asset servicing and asset management products. It's actually not a product sale, it's very much around -- it's much more akin to enterprise outsourcing. And that truly involves how investors -- how they invest today versus how they're going to invest tomorrow operationally. It involves a fundamental change in the operational stack, it involves a fundamental change in the technology stack. That kind of change requires, one, engineering capabilities on our side, but two, helping our clients through that change in management. And as we've learned along the way, that's why we also put out the guide that we put a goal out there that we wanted to, on average, reduce these installation times by 2 to 3 months. So let's call it a quarter to -- roughly a quarter. Think of that as a receivable, right? So we're basically pulling revenues forward from what they had been if we actually achieve that goal. And we feel like we're well along the way.

You all recorded your first private markets client for Alpha last year. Could you explain how that works? Because -- it's private markets, so I'm a little confused about how it would be tied to Alpha, which is an OEM system, and maybe explain how the offering fits into your long-term strategic plans?

Yes. No, it's a good question. So just from a nomenclature perspective, if you think of Alpha, at least the way we use it, that is truly front to back, from pre-trade, through trade, post-trade, portfolio accounting, performance and start all over again. So yes, in a typical securities-based market-based kind of front-to-back Alpha, you've got the order management system. Private markets, there's some of that in there. There's bank loans and things like that in there often times. But for the most part it isn't that, it's a contract-based system. But everything else is more or less the same. I mean the data element to it, the movement from the actual making the investments to the portfolios. There's a lot of complexity that these private market firms have incurred over the years as they've created these side pockets, either a side pocket or the ability for their investors to invest alongside in a particular kind of investment. So all of that creates reporting complexity and reporting -- a reporting data issue when it comes to the individual LP. So Alpha includes all of that. And then finally, the analytics and managing the data. Because ultimately, when we talked about Alpha at the beginning, we focused very much on how we were going to simplify operations, and we have delivered on that. It's very interesting how clients, though, are now coming to us as much initially with "Help us manage our data, help us to manage it, protect it, employ it, deploy it and ultimately safekeep it." So that also is the universal theme that applies whether it's private market or long-only.

Transitioning to the balance sheet, Eric, and maybe something for you here. In deposits, really hard to predict, especially at this -- in a regular environment hard to predict, at this point in the cycle really challenging. So maybe could you give us an update on what trends you're seeing quarter-to-date and what trends you're seeing specifically around like balance mix, costs? It's a very, very competitive environment.

Yes, Brennan, I'd described the deposit environment as just a continuation of what we saw as we described our fourth quarter earnings in January. I think you saw that deposit balances in aggregate floated up for us and for many in the banking industry in the fourth quarter. Part of that is the confluence of the Fed tightening of its balance sheet, but also the unwinding of the overnight reverse repo operation, which we think has sort of brought a sort of cash into the banking system. And so you saw deposits float up. So we ended the fourth quarter with a nice step off a higher level than we had originally expected. But it also bounces around by month. October was up, November was down, December was up. January tends to be about the same as December because of year-end and start of year. February tends to be a natural drawdown, March usually is a natural uptick because of tax and kind of cash building and assessing. So it's just really -- we're kind of, I'll say, just moving along.

Is it following that typical seasonal pattern?

For the time being, it is. We've seen what we would expect, total deposits continue to be in that range of $200 billion to $210 billion. We'll see. They could float up above that. They could be in that, you just don't -- we'll have to see month by month. We are obviously very engaged with our clients on deposits, because to us it's just another service, right? We can do servicing from a kind of fee and Alpha and so forth standpoint. But at the end of the day, cash is one of those activities, and we could hold it on as cash on deposits with us, repo when they want, collateral against it, we can help sweep it into our asset management complex. There's a number of different services. And over time, we've just tightened the, I think, the integration and the effectiveness of our coverage force to really think of it as a complete relationship. Noninterest-bearing deposits, we saw it tick up a little bit in the fourth quarter, which was a pleasant surprise. It's continuing to just float down a bit as we'd expect. So roughly in line with what we expected back in January. But every month, it will evolve, and we'll just keep folks posted on it.

Yes. What about on the cost front, anything happening different than expected?

No, I'd say it's kind of in line. You have a certain amount of kind of mix shift around noninterest bearing to interest bearing continues along, but not at the pace that we saw last year. So that's -- and we expected it to slow a little bit, but we'll have to see. We have various price tiers within interest bearing and across the globe. And we have very standardized rates, we have exception rates, we have initiatives. We have 3, 4 or 5 different tiers. And you kind of see some mix evolution, but that's what you'd expect at this point in the cycle. What folks are also looking at is, well, what will happen when rates come down, and we'll see, it's -- we'll see how that plays out as well. But so far, we're kind of in the zone of what we had expected in terms of our NII guide. And we just kind of want to see how it plays out month by month.

And a good segue there on talking about when rates come down. So consensus certainly seems to be that betas are going to be mirror image or somewhat mirror image of the way up, but while we hold steady, is the reason -- when we look at past cycles, there's been kind of an upward grind when you get a little higher. Is that how we should be thinking about deposit costs as well while we're in this holding period with the Fed? Mix shift, right? You talked about how new deposits come on at market levels and sort of it can be kind of a little upward grind?

Yes. I think that's just sort of classic banking. When you reach a high level of rates and you're steady there, you kind of have this momentum of mix shift and a little bit of a pricing grind. It's slow at first, it quickens up, right? As rates moved up quickly and then it tends to continue and then slow down and level off. So we're seeing that. I think it will be interesting if the Fed cuts -- at one point we all thought it would cut 6 times, maybe it's 2 times. We'll see how that plays out. But in truth, we're kind of -- we're in the zone that we have expected, and the business engagement is really with our clients all the way up to the C-suite, because it's -- at the C-suite level, right, not only just at the operations level, where they really understand our balance of trade, how we fare economically. And what we're finding is clients want to be successful in their business, and then they want their largest partners, and in many cases we are their largest partner, to be successful in ours. Why? Because they want us to be able to offer the services, the quality, the reinvestments, right? And they want to see the next generation of products. And they know that we need a little bit of balance and fairness in that.

Sure, the partnerships need to be strategic. Makes sense. Last one on NII, I promise. So I know it's a very, very uncertain outlook, right, but I was hoping you could help us understand the drivers, maybe unpack a little bit behind the high end of the $550 million to $600 million by the time you get to 3Q of 2024. It was a little lighter than I was kind of initially thinking. So any color on that would be helpful.

It's a good question. And in some ways, it's 1, 2, 3, 4, 10 months away, so I think it's going to -- time will tell. We're trying to put some benchmarks or beacons out there of what we might expect. It'll just be very dependent on a series of factors, right? It will be dependent on total deposit balances and how much cash exists in the banking system for us. And in particular, for our clients, right? We are asset-manager and asset-owner oriented. So it will be about cash deposit levels. And that will be impacted by risk-on, risk-off, all sorts of sentiment out there, and the Fed management of its own balance sheet. There will be some amount of evolution because of this mix and grind that you described, and so that will play into that. And then finally, just we'll see what happens with rates. Are they stable, do they get cut? That will impact -- I think that will be the -- probably the third driver, but the smallest of the three. So anyway, it's kind of one benchmark we've put out there. I think we'll update that, maybe not every month or every quarter, but I think by the middle of the year we'll have a better sense for what we expect towards -- for the end of the year. And obviously we're interested just like you are, because that then sets the stage for what to expect in 2025. And we're as interested as you and all of our investors. And so we'll try to see if we can -- we don't want to crystal ball it. What we'd rather do is see how the facts play out and update as it comes.

Fair enough. When you put out a number, you can count on the investor and the analyst community asking about it every quarter, so... Transitioning to expenses -- and actually, one of the slides you had, Ron, on your presentation, went right into this. So you had in there for 2024, $500 million of cost savings and then $400 million of investment. So clearly, self-funding the investment and a really healthy level of investment. Is that the right way we should be thinking about how you're trying to manage the expense base? And is that $400 million that you gave, is that the right way to think about how you think about a healthy level of investment necessary to stay competitive in the markets that you guys operate in?

I mean that investment is really driven by opportunity as much as anything else. I mean we see just enormous opportunity to continue to strengthen and build out and add features and functionality to the Alpha platform, for one. Second, there's a very large technology investment just around how do we drive productivity improvement, with productivity broadly defined. How do we reduce the amount of manual interactions and make things, really end-to-end, much more automated and much more machine-driven, if you will. Third, there's some -- with the -- as much as everybody thinks that custody and payments is an old established business, there's lots of opportunities actually to bring technology to bear on that, to digitize that. And then finally, in the businesses, each of the three businesses is adding to their product capabilities. It might be geographic, it might be particular kinds of products in the case of Markets & Financing. There's much more, and there's continued channel expansion. So it's opportunity driven, but we also -- we have margin goals here. And so much of the investment goes towards that productivity, but we also want to make sure that as we're investing that we're laser-focused on the BAU expenses and saying, what are our opportunities now to continue to reduce that? As you know, we've been doing this now for a few years. It's been a very deliberate program. Early on, it was focused on probably what you call the low-hanging fruit, the stuff that you could do quite easily, and that's good. And there's nothing the matter with that. And anytime that fruit gets [ high ], we'll bring it down. But now it's much more about fundamentally changing the operations, and that's very enduring and has benefits more than just reducing unit costs. If you can reduce errors, if you can increase client satisfaction, if you can, in one case -- or one good example is what we've done in the net asset value calculation area, that is largely automated. So it's less people now that are doing it. But more importantly, in domestic equities now, we're delivering NAVs about 45 minutes sooner than we used to. That's great for our clients because they're waiting for us at that close of market to then take that data and use it in a different way that they do it -- might be multi-fund structures. So it's also improving client satisfaction. So again, we don't think that one can continue to prosper and extend competitive advantages without investing at this level. But we also recognize we have a responsibility to do that in a way while we're continuing to generate positive fee operating leverage.

You said something that I do want to drill into, but I got two more questions I definitely want to touch on first. So as far as the capital front, State Street has certainly been good stewards of capital. Can you talk about thought process around your capital return decisions and the capital return algorithm going forward?

Sure. What I'd ask you to do is just turn back to our medium-term targets, right, which was to deliver capital returns 80%-plus of earnings. And part of that is we're an asset-light business, we create and generate substantial amounts of capital. And that lets us put in place a significant dividend, increase the dividend, a sizable buyback, and actually return the bulk of capital to our shareholders after the core work that we do, which is continue to support our clients or balance sheet expansion in a modest way and so forth. I think for this year, for 2024, we've said that capital return will be around 100% of earnings, so higher than in the kind of medium term. And that's largely because not only do we have that earnings power that's quite strong that I just described. but we also have some benefit from rates. The benefit from rates go through the investment portfolio, they improve AOCI, and that accretes back into capital. And our view is, as you say, we want to be good stewards of capital. We are. We've consistently been and we'd like to return that as well. So that's kind of the approach. What we did do in January was announce a multiyear capital return program. We have the dividend, a multiyear buyback. But I think the right way to just kind of think of it for the year is about 100% of earnings between the dividend and the buyback.

Buyback, yes. Fair enough. And then something that I know we wanted to touch on, you recently issued and called some preferred equity. So could you help us understand the impact of those actions on the P&L in the near term, and then if you have any other plans to optimize or change the capital stack in this environment?

Yes. I would just describe those actions as tactical in nature. We're always reviewing and making sure that we have the right amount of CET1, alternative Tier 1, which is the preferred part of the stack, and the Tier 2 capital. That's just the normal course of activity. We had some preps that were -- that either had reset or would have been resetting that we felt we wanted to retire. They reset at higher cost and higher prep coupons. And we saw a very attractive market to issue and actually improve the cost even as we upsized a bit the alternative Tier 1 stack, but kind of within that 1.5% band that we'd like to have of the -- of RWAs. In terms of the P&L impact, it's kind of what you'd expect. I think in fourth quarter, our prep costs were almost $40 million for the fourth quarter of '23. Because of the overlap period, right, you kind of issue and then call and then there's some transactional costs. We'll tend to have probably a $15 million bump roughly in the first and second quarter from the $40-ish million that we had at the end of last year, and then we'll revert back down to around $40 million per quarter going forward, starting in third quarter.

Got it. So a $15 million bump just in the first two quarters? Okay. Great. And then one that I'd just love to drill down on, Ron, from some of your comments on the investing and efficiency and some -- and whatnot. The digital journey at State Street has been something we've been watching a long time, over a decade, really. Where are you, you think, in that journey? I know it's really not something where there's a beginning, middle and end. But when you think about how much you want to automate your operations, your processes, where are you right now, do you think, in where you would like to be given what's available today? And also, have you thought about how AI could come into the picture?

Yes. So I mean, first of all, we think about the digital journey in two broad ways. There's the digitizing of assets, which we think is still very, very early on, in its infancy. It's part of it, it's been in a major way distracted by the whole crypto area. And so everybody talks about that, yet the real opportunities here are in things like tokenizing hard assets. And that's a combination of building up of the -- infrastructure providers like us building up capabilities and the market kind of accepting that and moving forward. So that is one where we're working alongside the market. Then there's the digitalization of everything that we do. And what's interesting about your question is if you'd asked it maybe 24 months ago, I would say, "Yes, we're well down the road. I mean, we're very advanced in machine learning." And then you see the opportunities that are presented to you by GenAI. And so the 10 that I referred to in terms of the -- 10 projects that we have underway, virtually all of them are gen-AI related. I mean we're -- still continue to build out. I mean, machine learning is very powerful for the kinds of things that we do. I mean, repetitive processes that you can actually have a machine learn and adopt and then the human steps away and is only there to look at the exception processing. We'll continue to do that. But GenAI offers all sorts of opportunities if you think about reconciliations and the ability to actually, in a very, very quick way, make a decision on whether or not this is something that needs to stop, what's going on, or can we send a transaction straight through. Obviously, that's something that you don't want that to run away from you, and that's something that we have to continue with. So in terms of where we are, I think this is still, to use baseball terms, we're still in the second or third inning now. And that's only because so much new opportunity has come to us. On the client side, and I think we, like everybody else, you want to do it inside first and make your own mistakes inside. On the client side, we think it will be even more powerful, because if you think about how our client service people spend time, oftentimes there's this huge rush in the morning. People get to their desks, they turn on their machine. They don't understand what's there. And sometimes it's on their side, sometimes it's on our side. But nonetheless, they're coming to us, rightfully, to figure it out. we see lots of opportunities for GenAI to reduce that volume and accelerate the answer in a very meaningful way, for example. It's an exciting time.

Without a doubt. And then speaking of time, we're now out of it. So thanks very much. Appreciate your time today.

Thank you, Brennan. Thank you everybody.