The Bank of New York Mellon Corporation (BNY) Earnings Call Transcript & Summary

All right. Thank you, everyone, for joining. We have from BNY Mellon CFO, Mike Santomassimo. Mike, thanks for being here. How are things?

Yes. Very good.

Great. Look, I think we can jump right in. Last year was a challenging year on the NII side, but somewhat lost in that is the fact that you grew fees by about 3%. No outlook given for fee growth this year. But talk a little bit about the variables that are going to contribute to fee growth in 2020.

Yes. Yes. And many of our -- as many of you know, many of our businesses are -- have pretty long sales cycles. And so for businesses like Pershing or Asset Servicing, we -- typically for a good chunk of the fees, you sort of have some visibility at least [ as ] sort of businesses is being implemented and making its way through the pipeline. And so as we sort of think about each of those businesses, we still feel really good about the pipeline and the implementation queue for Pershing. It's still -- the pipeline has been consistently healthy for a while now. And we're working through the implementations of those as quickly as we and the clients can sort of do it. And the opportunity there to service more RIAs and kind of the even the institutional broker-dealer market seems still very good. I think -- and then as you sort of think of the other businesses, we've been making investments across a whole series of items, which I'm sure I think we're going to get to a little later. But I think we feel good about the core offering. We feel good about the conversation we're having with clients, and we're kind of working through each of the pipelines. And then in the short run, I think the volatility can be helpful for some of our businesses, like FX as well as some of the trading volumes that we see or transaction volumes we see in many of our businesses. And so over the last couple weeks, that's been pretty healthy as well.

That's great. With fourth quarter earnings, you guys highlighted that you were monitoring and measuring client relationships, and I'm sure you don't want to give away your secrets there. But can you talk a little bit more about what that means, what you're finding and the impact that's having on retention and new business wins?

Yes. Yes and there really aren't secrets when you sort of talk about stuff like that, all right? It's we -- when you think about what we do for clients every day, it's a very detailed, granular set of services we provide. And so what we've been doing now for at least the last couple years more consistently and more broadly is really going client by client and have 50, 60 different kinds of metrics we look at on any given client. We do that probably for the top 200, 300 clients consistently and maybe a little bit deeper than that in a more limited way as we're looking process by process to see how we're functioning any given day to make sure that we're delivering in the way that we want. And then we take a series of those clients every single week and pull in a pretty senior team, our head of operations, senior technology folks, client service folks, sales folks, relationship managers; and go client by client through sort of the what we're seeing, what we're hearing, where we can be better. And so that's sort of one element of it. The other element of it, our clients tell us, too. So we get pretty detailed scorecards from a whole number of clients. And in some cases, I'm talking 70 measures that clients may give us. It could be a 15-page scorecard that we get. And so we got a pretty good sense of where we stand. And we've been very focused now for 2 years thinking about how do we take each of those measures and improve the day-to-day quality of what we do. Because if you think about the industry we're in, I would argue, over the last -- you can pick the number of years, none of the big providers, including us, have really differentiated themselves in service quality, day-in and day-out service quality. And that's where we've been focused now for the last couple years. And so you see in the scores going up that clients give us there's a series of clients where we might have been 3 or 4 out of 5 or 6 in the past, and now we're -- we've been consistently 1 or 2 in most of the way the clients have been scoring us. And we're starting to see that come through in attrition rates, too, in our core Asset Servicing business, where we've seen the attrition rates come down over the last 12-plus months or so. So we're starting to see that come through. And if you think about growth for fees, the easiest way to grow your fees is to not lose clients and really reduce attrition rates. And so we're starting to see some of that benefit.

Yes. And you hit on service quality there, but are there any other ways you can kind of differentiate that core custody business? What are some of those?

Yes. I think there are a lot of things we're doing in Asset Servicing that I think will help us create a much more competitive product set for clients. And we've taken a very different approach than maybe some of our competitors, where we started to open up the platform and really think about it from an end-to-end perspective for those clients in an open architecture way. So we're partnering with BlackRock, Bloomberg, SimCorp. We've got a series of fintechs that are helping us improve some of the processing that we're doing. We just announced another partnership with a fintech to help us do contingent NAV processing for clients. And so there's a whole series of things we're doing by partnering with some of the best providers of those capabilities, and we think that's going to be -- help differentiate us over time. We're building out capabilities that we sort of think of as data and analytic capabilities. We'd start from basic data aggregation and then build on top of that to add use cases that start to add value in different ways for clients. We've got a whole series of initiatives that we're piloting now with individual clients that we hope we'll be able to talk more about and scale across other clients over the coming months as we sort of build out those. And then on the alternatives side, we've been investing. Credit managers. We launched some new capabilities in probably 3 or 4 months ago now for credit -- private credit managers. We've been investing heavily in our real estate capabilities and sort of that broad, broadly speaking, sort of alternative set of assets for the last probably 3 years now.

Maybe we could stick with the OMS and front-office partnerships. Interested to hear what you're seeing in terms of client uptake here. How are your clients responding to the integrations? And talk a little bit about the functionality that you guys can provide there.

Yes. So I think the common clients we have actually are responding actually really well, and they like the things we're doing. There's a couple things that -- where they'll get some benefits. And the things we're doing today, I sort of think of as step one. The real benefit we're going to get over time is by partnering with these -- by -- with the OMS providers to continue to evolve what we can do for clients. And so -- and we get to co-develop with them. And so there's -- you think of like a BlackRock, where we've got -- and I'll walk you through the details of what we do today. But the benefit we're getting is by sitting down in a room and co-developing with their Aladdin folks and have a whole series of things that we'll, hopefully, roll out in the coming quarters that sort of continue to build on the initial set of capabilities. But first and foremost, what we did is -- there are some things that are happening in the background where we're improving system-to-system data transfer and integration. So if you think about an OMS provider having to provide trades to their middle- and back-office service providers, we're making that easier, richer, simpler for clients that -- sort of make it more straight through. And if you look at the straight-through processing rates that have improved, they've gone from -- and I forget exactly where they've started, but call it they're probably better by 40%, 50% in terms of the increment, in terms of the improvement that we've seen across that. And then what we're able to do is -- an Aladdin user can actually log into Aladdin and CR, we call them widgets, CR widgets, and through single sign-on, log into the widget and start to see data that's coming from our systems in a realtime way. So it reduces operational friction. In the past, it would have gone -- had gone to a different system. They would have had made a phone call, e-mailed somebody. So now they're able to get some pretty interesting information about where their trades are and a whole series of other use cases by just logging directly into Aladdin. And so our view is that clients aren't going to choose their middle- and back-office provider only through having us own the OMS provider. And so partnering with these, we think, will resonate more with more clients and give them the ability to get most of what you can get by having sort of this closed system through having an open architecture system.

Got it. I want to switch to the balance sheet. Last week, you reiterated your outlook for NII to be down a little less than 5% in the first quarter. Obviously, things look quite a bit different than they did last week. How are you thinking about NII today given the change in the environment?

Well, they look a little different than yesterday, right? I don't know about last week, but -- no. Look, I think the -- as I said last week, balances that -- deposit balances from clients are higher than we modeled, for sure, both in noninterest-bearing and total deposits. So I think that's the good sign, and I think that's continued over the last few days since we talked last week. And obviously, rates being lower is offsetting some of that. So I think from our guidance for the first quarter, we feel -- we still feel good about it.

And while we're on the outlook, any other updates that you want to provide us with just a few weeks left to go here in March?

Yes. Look, I think as I mentioned a minute ago, as you sort of think about the other drivers that impact in the short run, we're seeing an uptick in volatility in the FX market. That's been -- that's helpful for our FX business. We're seeing some transaction volumes that are elevated given the market volatility that we've seen. Now that's over 7 days, I think, now or whatever. So it's 7 days doesn't make a quarter, but I think those are healthy signs that were coming through. And I think you have to sort of keep in mind that a lot of people focus on our Asset Servicing fees as sort of one of the barometers. And yes, a good chunk of that line is actually things like transaction fees. And so it's probably about half of that line is subject to sort of the fluctuations in the market, both equity and fixed income, and the rest of it is other types of fees, including transaction fees. So as you see, some of the volatility that's in the short run helpful. We'll see if that continues.

Great. Obviously, the current rate environment and the curve are tough. What kind of opportunities are there to improve the yield profile without adding too much risks, extending duration too much, anything like that?

Yes. Well, I'm not sure, if you extend duration, if that helps or hurts your yield...

I know, in this environment.

But the -- that, we can debate later. No, look, I think we've -- for a very long time, we've had a pretty consistent risk appetite. And I don't see us changing that in any significant way. We're always sort of thinking about how to optimize the yield on our securities portfolio in particular, and I think you'll see us continue to do that. It's tougher in this kind of environment, but I think we're going to continue to look for ways within sort of our appetite to do that. And there's a bunch of different ways you can sort of do that as you sort of look at credit spreads widening a little bit. But whether it's fixed-rate, CMBS or other types of securities and so -- but I think you'll see us sort of operate generally within the risk constraint that -- risk appetite that we've had for a while.

Right. And on the other side, you've talked a lot about deposit optimization. I'd imagine that that's something that's never totally done. Where are you with respect to deposit optimization today? And where are you focusing the most going forward?

Yes. I think we're doing our most sophisticated work that we've ever done in terms of trying to optimize the deposit base. So I think that's the good thing. And I think you're right. You're never done because, as you sort of think about pricing deposits for any given client, generally there's a whole set of expectations that come around the relationship because many -- most of our deposits are linked to the underlying operational services that we provide. And so as you look at the how you price at any given client, there's a whole set of expectations around volumes and other business they have with you. And so those things are always changing. And so you're always looking to see are you priced right on the balance sheet and the deposit side, and I think that's something we've got more to do on as we sort of look over the next few months, for sure.

And now turning to expenses. The outlook for 2020 is that expenses will be flat to up 2% this year, and that obviously includes some continued investment. You've talked about tech investment in the past. I'm hoping we can drill down a little more. What are the key areas where you're investing in 2020?

Yes. We've -- over the last couple years, we've been investing significantly in what we sort of call the [ underlying ] operating platforms, data centers. We sort of re-kitted or re sort of plumbed our existing data centers. We've upgraded a whole series of other infrastructure as well. And we've deployed most of our applications into that, those new setups and sort of think of it as like a kind of private cloud kind of environment. And so what you get from that is very high resiliency. And if you think about our business, that's supercritical. I always say we're sort of day 0 every day. You have to come in and deliver the service and calculate the NAV every single day, and you have to do it well. So those -- that having super highly resilient systems, I think, is really important. It's increased the processing time across a whole series of things we do for clients, in some cases 30%, 40%, 50% or more in terms of reducing processing times. It's increased our ability to move faster as we sort of evolve our capabilities. And there's a whole series of things that we've been investing in. I mentioned a couple earlier around the alternative servicing space. We're building new capabilities for our Wealth Management business in terms of the tools we give clients and the tools we give our advisers. We are, in Pershing, continuing to deploy new capabilities for our RIA clients. And so every single business is not only investing in that [ underwriting ] operating platform but also adding capabilities across a whole series of things that we've been doing. And then the last piece, I think, as we sort of think about 2020 is we're spending more this year than we ever have in technology investments in any year to drive the efficiency agenda across operations and some of the other pieces of our business. And we think that's going to be a critical piece of it because the efficiency agenda is not just about saving money. It's actually about improving quality, going back to what we were talking about earlier. Because 9 times out of 10, the conversation starts with how do we make the service quality better, which leads you to how do you automate or how do you create more efficiency in how you're processing something in operations, which saves you money as you sort of do that. And so that's where we've been investing this year. That's where we're going to invest this year.

And you're asked frequently if there are investment or spending areas you could flex lower if the revenue environment got tougher. I'm certainly interested there, but I'd also like to flip that on its head. If you had a little more capacity, what areas of investment would you be most eager to do a little more in or scale up?

Yes. Look, I mean, we're constrained by what I would argue most people are constrained by. It's -- and it's not money. It's actually people and subject matter experts to deliver the change in the way you'd want it to be delivered. And so we're moving as fast as we think we can responsibly move in just about every -- in most areas. I'm sure there's something -- there's always something that you want to move a little bit faster. But I think, in terms of the significant things we're doing, it's really the constraint is the people and the subject matter experts that can deliver it in a high-quality way. And so as we sort of scale up some of those teams, that's where we'll see some of the things move faster. And that's why if you look at our efficiency agenda, we brought in a new head of operations. It's been almost exactly a year, maybe slightly over a year now. And as he sort of changed some of his team and brought different people in, we feel like we can move even faster on some of the efficiency agenda. And that's why we're investing more this year than we did last year. But I don't -- but I wouldn't highlight anything that we feel like we're being constrained because there's money. I think, as you sort of think about where we can flex, there's always things you can flex. And you have -- you think of how you fund projects and your budget. The real world gets in the way of a budget on January 2. And so you're always sort of recalibrating and rethinking about your investment spend as well as your other spend across the company as you sort of think about the environment and think about how long it -- if you're getting into a challenging environment, how long is that going to last? And so we're always sort of thinking about where we want to flex there. But I think, on our key investments, we do feel very strongly that we need to continue to make those investments because that's what's really going to drive success for the future. But where we need to and where we want to, there's always areas that you can flex on any given year.

Now the efficiency and cost saves side, I think you and I have talked about it in the past. As you kind of work through 1 project, it tends to reveal 2 or 3 more opportunities. Is that still the case and the relationship you're seeing today?

Yes. The list just keeps growing. I think the active project list that -- it was probably 30-plus big and the list of things that we want to do is probably 100 deep, and we keep adding things to it. And so I think it's sort of the old peeling the onion analogy, right, where you sort of keep peeling and keep finding new opportunities. And I think, when you execute 1, you -- the next 2 or 3 become that much more clear. And so far, that's still the case. And we feel we're in kind of the early innings, right, the old adage. We're sort of in the early innings of sort of where we can go on the efficiency side.

And then looking out longer term. In the past, you've talked about 1% of revenue growth translating to 2% or 3% earnings per share growth. That's still a relationship that you feel is intact today.

Yes. I think that's right. I think you sort of have to -- you have to look through the rate cycle a little bit to sort of get to a place where you feel like that's in a predictable, sustainable place. But I think the -- yes, we still feel that there's good operating leverage in the business. And we can see that as we add new clients onto the platforms. And so we still feel that that's about the right way to think about it.

And how should we think about investment in that context? Does that degree of operating leverage allow for investment at a level that's similar to what you're doing today?

Yes. Definitely, for sure. And I think the -- if you look at sort of what we've delivered over the last couple of years, and we talked a little bit about this in a different forum, is in 2019 we spent less in operations than we did in '18. In 2020, we're going to spend less than we did in '19. And so we actually -- it's hard to see it sometimes from the outside, but we can actually see the saves coming through in the places we want them to be. And that's what's funding the investment we're seeing. And as we sort of -- as we can accelerate those and dive and continue to execute on the efficiency agenda, there's plenty of operating leverage in the model while you still invest.

Maybe switching to capital return. Now that you've had about 12 hours to digest the SCB announcement, do you have any initial thoughts there?

Yes. I was sort of joking with the team that I've got the bad luck of probably being the first CFO to be on a stage 18 hours after like they've completely changed [ your ] capital regime, and there's somewhere between like 100 and like 50 to 200 pages of documents. And I would argue the Fed didn't -- I mean it didn't make it that easy to understand and like sort of some conflicting sort of headlines and messages even in their own sort of documents. And so take it all with a little bit of a caveat. But as we sort of look at it -- so we agree with the general direction, right, which is sort of how do you marry -- how do you manage your capital and kind of these stress environments and sort of BAU and the stress tests. You marry them together. So we think that's sort of the right approach as you sort of think about the stress capital buffer in total. If you use the historical Fed models over pretty much any given year you would sort of want to look at, those would imply, based on their calcs, that we would -- if you use the past years as a judge, then we would be sort of at the floor of the stress capital buffer. So if you think about our minimum CET1 ratio, if that's the case going forward, that's about where we are today. So really no different there. I think the interesting part that's I think in the rule that we sort of all need to understand better is it does give you flexibility to do more capital return off cycle per se, right? So in the past, most of your capital return was governed by what you did in the CCAR test. Now you have more flexibility on an ongoing basis. So I think that's a good thing. And the other factor that we're sort of looking at is Tier 1 leverage. I think this is probably the most confusing part of where they've communicated. But Tier 1 leverage is still part -- is still a relevant factor as part of the way you think about the CCAR test and as well as sort of the ongoing capital return. And so that's something we're going to need to think about, how it all plays in between what you do in CCAR and how you manage on a BAU basis. But I do think that not having the stress leverage buffer is a good thing, which was part of the original proposal, but Tier 1 leverage still is in the mix. And so we'll have to understand exactly how that's going to play into what you can do and what you can't do. But overall, we're generally supportive of the direction where it's headed.

Got it. And the CCAR scenarios are out. How are you feeling about the tests? Anything in those new scenarios that stuck out to you?

I don't think I'd highlight any one factor that stuck out. But it's there's pluses and minuses relative to last year, but it's not that dissimilar to last year. And so it looks about the same. Some of the starting places of where the variables start are different, obviously, but it didn't -- from our business model perspective, it wasn't that different.

There are a couple of mics around the room, if there are any questions...

This is webcast.

Yes, webcast.

I'm not up-to-date on where you are on the CEO search transition. Can you talk about the impact of Charlie leaving and what's left of his initiative? What's the continuity? And what's changing? The fact that he left, what's the impact?

Yes. It's -- so Todd Gibbons, who's our interim CEO, he's been with the company, many of you know, for a very long time and was part of most of what we were -- if not everything, we were sort of doing over the last couple of years and really helped develop a lot of the plans and strategies that we had. So the transition has actually been quite seamless in terms of the execution of what we were doing. And so from that perspective, we're still off to the races in terms of executing the initiatives that we had. We haven't really seen any significant change at all there, which is good. And I think the Board is kind of working through their process. So they will let us know when they're done. I think I have a legal obligation to tell you when they're done. But when I know, you'll know.

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You need to use the mic. You need to use the mic. Sorry.

[ Yes. Can you ]...

Sorry. Can I ask about the broader competitive universe for sort of data analytics and execution systems for fund managers? I mean to -- you partner with some. I guess there's kind of a little bit of competition as well. Can you talk about how you fit into that broader universe? Sort of what are the trends we're seeing there?

Yes. I mean if you think about the execution of OMS providers, however you want to sort of phrase it, we don't compete with them from an execution point of view. We actually integrate with them to help provide middle- and back-office services for clients. And so I think the -- from our perspective, as I said earlier, we really think the right approach is to be able to provide most of what you can provide, if not all of what you can provide, by having sort of a closed system, [ all of what ] some other people are doing, through better integration with each of the key providers. And we think that will resonate more for clients because as many of you know, much better than I do, a lot of the OMS or execution software providers are good at aspects of what you all need. They're not good at everything. So some of them came from fixed income background. Some came from equity background. Some do credit better, credit product better. So there's a whole range of pros and cons to each of the underlying providers. So our view is like what clients really want us to do is integrate with them better so that they get the benefits of that integration by streamlining sort of the middle- and back-office services in a pretty substantial way. And like I said earlier, we've actually seen that actually come to fruition, where we've been able to streamline the processing pretty significantly for clients that are using us and some of those other firms' capabilities. And that's really what clients want to get out of a provider like us. And so going to buy one is really -- we're not probably the best owner of those capabilities because clients, I think, are going to want choice.

[ I do ]. What about on the sort of you talked about data aggregation, data analytics. That is something that they do as well. So how does that fit together?

Yes. Look, I think many of our biggest clients use multiple providers even from an execution and OMS provider or even back-office provider. And many of them or if not all of them are all struggling with like how do you pull the data together across their portfolios and providers in a way that is easy to sort of use, easy to aggregate both other data sources, both structured and unstructured, and to continue to invest in those in that. And I think there are -- many of them are finding it's too expensive to do it on their own. They're not able to get best-of-breed capabilities by doing it themselves. And there really hasn't been a provider that's done a great job. And so what we've been trying to do is build off of a capability that we've had for a very long time that was part of -- originally part of Eagle, which is a software company that we've owned for 20 years or more. And they've got $25 trillion or so or $30 trillion of assets on this aggregation platform. So we actually have like a real thing that you start with, that you're able to now provide a whole bunch of use cases off of -- off the back of sort of that basic data aggregation. And we're finding clients think that the capability is good and that we're able to do it in a way that both saves them money and give them capabilities they can't replicate on their own. Yes?

Just use the mic...

What trends are you seeing at asset managers in terms of how they are consolidating providers or outsourcing more? And how are you trying to benefit off what you're seeing in terms of those changes?

Yes. I think the -- in terms of consolidation of providers, the biggest asset managers need multiple providers. And so I think, as you sort of go, if you just use size as the spectrum, the smaller the asset manager, the more likely they are to have one core provider. The bigger they are, the more likely they have multiple. And that makes a lot of sense, I think, from their perspective. And so -- but we are seeing people come to us where we're doing a good job to bring more of their assets over to our platform, I think. But when you think about outsourcing, what's forcing the environment and the pressures that they feel is forcing asset managers to think differently about what they would outsource, which does create opportunities. And if you think about -- let's start on alternatives. If you think about hedge funds to -- all the way to private equity and infrastructure and real estate, those hedge funds are outsourced to some degree already, not all of them but a lot. And if you go to the other side of the spectrum where you think about real estate, infrastructure, private credit, others on in that bucket, those are much less outsourced. The percentage of them are -- is much smaller in terms of what's outsourced. And so that's where we've been really investing our dollars is to go after the opportunity where there's -- where we think people will want to outsource in an increasingly higher rate over time. So that's one element of it. And then I think the other piece is, as clients feel the margin pressures and some of the secular changes that are happening in asset management, they're going to outsource more things. And middle office, generally speaking, is sort of that area where we're seeing opportunity. And we've -- what we've tried to do is think differently about how to do that. In middle office, we've sort of broken it down into 7 different verticals. We're not trying to do this, be this ubiquitous provider in a way that maybe some have done in the past. We're willing to be very flexible and componentized in terms of how we go about it with clients. And we think that's starting to actually resonate quite a bit with how people want to interact with their outsource providers.

Maybe I can just sneak one in on Pershing because you touched on that a little earlier. It's the business you've been excited about for some time. How are you feeling about that business today? And then talk a little bit about the consolidation, the changes in that industry and how that's playing out competitively.

Yes. We feel good about that business, actually feel great about the business and both in terms of the team that's executing it but also the opportunity that we have there. And it's just been consistently sort of doing a good job as they sort of execute against both the RIA space and the institutional broker-dealer opportunities that they have. I think the changes that are happening around us and the environment actually create opportunities for us. I think we -- if you think about what Pershing has -- offers clients is they offer a much more fulsome set of capabilities, and they offer an ability to get flexibility in how they -- how it's offered to clients. And so it's not a "one size kind of fits all" offering, which I think some of the other providers are a little bit more skewed toward that side of the spectrum. And that's Pershing is actually the place in our company that started the open architecture approach to the way they deliver services probably 10 or 15 years ago. And what we do is -- or more maybe in some cases, but we integrate best-of-breed providers, whether it's CRM or performance and risk. Or there's probably 10 or 15 verticals of capabilities where -- and we integrate across 60 or 70 different outside providers. So a client can come to us and customize in a very scalable way the solution they get from us, and we think that positions us pretty well in terms of the what others are doing in terms of the consolidation. So we feel good about it.

Got it. And on Clearance and Collateral Management, that's you've mentioned some rule changes in that business and create opportunity. Talk about where we are with respect to those changes and how you're seeing the opportunity there.

Yes. I mean collateral management space has changed a lot over the years. And I think the regulatory changes that are driving more people to post margin in particular helping us quite a bit in terms of some growth we've seen. But in the core collateral space, if you -- the industry developed over a long period of time to sort of think about their collateral pools as the U.S. and outside the U.S., and technology sort of developed around those 2 collateral pools over a period of time. And so one of the investments we've been making now for a while is how do you connect collateral pools more seamlessly across the globe. Some of that's technology work that we're doing inside of it, and some of that is helping clients think about how to do that more seamlessly. And we actually think that's going to help clients reduce their funding costs and optimize their own infrastructure in a way that should drive more growth to our platform as well. And so I think there's -- we feel good about the opportunity that we've got both here in the U.S. and outside the U.S. from regulatory change and other drivers that we can -- other drivers of growth in the collateral business for a number of years.

Any other questions from the room?

Just curious, any update on pricing pressure in the industry as a whole? And I think your -- one of your competitors talked about things maybe stabilizing a little bit, but are you doing anything in terms of how you price business differently with clients? Or is it kind of business as usual?

We've had a very disciplined pricing process well before I got to the firm, and how we think about rebids or new client opportunities that we have. And so we've got -- it's very disciplined in terms of the approach. And so we go into any opportunity eyes wide open in terms of the margins and the expected sort of volumes that we would think are going to come. So I think that's been a long-standing practice. I think in the -- and so we haven't changed that in any significant way over the last couple of years. In terms of pricing pressure, it's been very consistent for us. We've been -- we've tried to be very clear about this. And that -- and if you look at over the last few years, the pricing pressure we've seen has been very consistent. And it's very -- it's people say, well, why are you seeing pricing pressure in this business, right? And I think if you think about it, we're a mature -- we're in a mature industry. And I can give you 10 examples of other industries or other parts of financial services. You're going to see pricing pressure in a mature business, and I think it's been very consistent. It's something we can predict pretty well and is sort of baked into how we think about what our -- as we sort of go back to that sort of model of what we should see in terms of the operating leverage in this business. We -- it's been sort of baked into that, how we think about that. And so it's been consistent, hasn't been changing. It's something we have really good visibility on. And we would expect that to continue.

And just curious, maybe an update on blockchain for the industry and opportunities you may see there medium term...

What's that?

[ No, it's not ]...

Well, look, I think blockchain is a fancy database, right? And I think the -- will there be use cases where blockchain makes a whole lot of sense? Yes. Is it going to transform the way the industry works anytime soon? No. And we use blockchain internally for some use cases that I think makes a whole lot of sense. We use it in our broker-dealer, our claims and collateral business. We actually use it as a -- like a backup system. So if you think about what we do for the U.S. treasury market in terms of the clearing we do, we have a primary, a secondary; and then we use blockchain as a kind of a tertiary sort of backup system so you can take snapshots of all the transactions and activity that's happening throughout the day, if you ever needed to use it. So we've got some real-life use cases that we're using it for and, I think, as is many of the other people in the industry, but it's hard to see it transforming anything anytime soon. And I think there are plenty of ways to drive efficiency in the model without -- that are actually much more efficient to operate and develop than blockchain right now.

Thinking about the competitive landscape. Some traditional banks, for lack of a better term, have talked about expanding in trust and related businesses. Can you talk about in what ways you feel like you're insulated from this and other ways where it might provide some incremental pressure?

Look, I think we have some strong competitors already across our peer set. And so I think we -- and we feel really good about our capabilities and competing against those. I think it's a tough business to replicate. And I think, some of the things we do in clearance and collateral, you couple that with Treasury Services and the Asset Servicing business and Pershing, those are things that I think are multi decades to sort of try to replicate across any one provider. And so we feel good about sort of like having a -- the breadth of what we do, and we feel good that we'll be able to compete against anybody that tries to come into the space. But we've got strong competition that we try to learn from every day.

Time for one more.

Over time, there have been various periods where the big things that have created great opportunities for you and a couple of your close competitors -- are we in a phase now where there's another big thing on the horizon? Or is it incremental growth in each of your businesses as they continue to flourish?

Look, I think there are opportunities to grow in every one of our businesses. The only one I might put aside is our depositary receipt business, but it's a very small piece of the overall company. I think there are opportunities to grow in everything we do, and some are bigger than others, and some will take longer to get at than others. And so I think we feel good about that opportunity. I don't -- I wouldn't highlight in the way you've described sort of one big thing that's going to be the silver bullet that sort of drives the growth of the whole company, but I do feel like we've got pretty significant opportunities in many of our businesses to grow for a while.

I think we're out of time. Mike, thank you very much for joining us.

Yes. Thanks.