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

This is Jason Goldberg, a Barclays U.S. large-cap bank analyst. As we round out the second day of our Global Financial Services Conference, we're very pleased to have BNY Mellon with us. And from the company, we have Todd Gibbons, Chief Executive Officer; and Emily Portney, Chief Financial Officer. Thank you both for joining us.

Todd, maybe the best place to start is about just the growth momentum. A lot of organic growth opportunities we saw come into fruition in the first half of the year. You've obviously been on a journey to position the company for higher organic growth for a couple of years now, but it appears to be kind of momentum picking up, going from little organic growth in 2019, so let's say, 1% to 2% in 2020, and it feels like something in excess of 2% in the first half of this year. Can you talk a bit about where you've seen the most traction and maybe link it back to some of the decision in investments that were made over the last couple of years?

Sure, Jason. And first of all, thanks for inviting us. It's great to be back at this conference that I've been doing for so many years, really one of the best. So I appreciate you pointing out, we are seeing a pickup in organic growth. It was flat a couple of years ago. As we look out for the rest of this year, I think we're well positioned to be north of 2%, solidly north of 2%. Probably worthwhile for us, just to share with the audience how we actually measure organic growth. So we accept the -- or take out the benefit of the higher markets and especially the equity markets. We adjust, for example, fee waivers due to interest rates and the fact that they're getting waived. And we take currency into account. And the other thing that we do, which probably some others don't do, is we adjust, for example, the volumes both of deposits and money market funds because of this interest rate environment. So we actually bring them down about 20% when we make the calculation. So as we look at our businesses, we're seeing pretty good momentum just across just about every one of them. And it's probably worthwhile for me to describe a little bit how we're -- how we kind of think of ourselves. About 45% of our revenues are related to securities servicing, which is Asset Servicing and Issuer Services. That's pretty much aligned with our peers in terms of revenue source. About 25% of our revenues are within our Investment and Wealth Management. And the remaining 30% is what we call market infrastructure. And I think it's a bit unique to us, and I think it is a differentiator and creates quite a bit of opportunity for us. And that includes Pershing, which is really a wealth tech business, our Treasury Services business, our Markets business and our Clearing and Collateral Management business. So when we look at what's going on in our security services business, our position is to be open-architected. So we connect with multiple OMSs, and we're building data services that connect multiple custodians as well. We think, ultimately, that's the winning strategy. We're also looking to move up the value chain. So I know we'll talk a little bit more about data and analytics, but more of an orchestrator rather than simply providing back-office services. And I think key to success in this business is quality of service. If we're not providing a very high quality, reliable service, accurate and on time, you don't really get the opportunity to sell all the additional innovation that you're doing. So that's critical. And we've seen ourselves, and I'm sure Emily will touch upon this as we talk about wins, we've seen ourselves really move up as the top-quality provider. And so both wins and pipelines, and the pipeline are quite solid, in the Asset Servicing business. As we move over to the market and -- or what we call the market infrastructure business, we really see a lot of opportunity for Pershing. Here, it's serving the very fast-growing advisory space as you see the retirement business growing as rapidly as we continue to see opportunity there. We do not compete. Unlike some of the other providers, we do not compete, and there's a strong demand for that as there have been some consolidation in the industry. And it also benefits us elsewhere as we deepen relationships. I mean our Asset Management clients are distributing through the Pershing platform an enormous quantity of over $1 trillion of their assets. So it helps us deepen relationships there as well. And it's also a platform that we can connect to our own asset managers. And finally, if you look at Treasury Services, which we've been digitizing, and we've got some very interesting product that we're developing out of the real-time payments capability which we were one of the first to connect to. And in Clearing and Collateral Management, I know you've heard us talk about that for years, it really is paying off. We have been increasing our balances on the Collateral Management side dramatically. And as we've invested and we're getting near the end of this in building an open platform so that our clients can have interoperability around all of their collateral globally, it's going to make them far more efficient and will make our platform far more attractive one than anybody else in the world can offer. And finally, the remaining area that I'm talking about is Investment and Wealth Management, about 25% of our business. Under our new leadership there, we are seeing good growth in our assets under management. And Emily, I think, you were going to spend a little more time talking about that in a few minutes anyway. So I'll leave it there. Good momentum across the franchise.

Okay. That's helpful, Todd. And just before I followed up with a question to Emily, just remember, for those listening in the audience, there's buttons on the top right-hand corner of your screen. [Operator Instructions] So Emily, I think Todd provided kind of a nice overview of kind of some of the organic growth momentum that's going to play out over time. I guess maybe we could pull up and just how does it tie into the third quarter and how is the third quarter looking from, say, a growth perspective?

Sure. First of all, Jason, thanks for having us. And hopefully, next year, we finally will be able to do this in person. So we're really pleased with what we're seeing in the third quarter across many of our businesses on the back of both very healthy organic growth as well as, of course, higher market levels. In terms of the third quarter, what I would say is that fee revenues, ex waivers, we're expecting to come in at about 10% year-on-year. And that will translate into a full year forecast for fee waivers -- sorry, for fee revenues, ex waivers, at the higher end of the range that we guided to in the second quarter, which I believe was 7% to 8%. If you want to just touch on a couple of the -- get some color on a couple of the businesses. So in Asset Servicing, I think Todd already alluded, to both new wins as well as activity with existing clients continues to run higher than it was a year ago. In Depositary Receipts, we continue to see a resumption of DR issuance, and that's as well as the fact that the third quarter is generally seasonally our highest quarter in that business. As Todd alluded to, balances in collateral management are higher than we had anticipated. Even markets in Pershing, which normally we do see the typical summer months slowdown, they are -- those businesses are performing as we expected. And finally, in Investment Management, we are on track to see the sixth consecutive quarter of positive long-term inflows. Before I move on from just the revenue story, I just wanted to touch on investment and other income, which is we do categorize separately from fee income, but it is core. And in addition to the $60 million or so that we have guided to, we will benefit from higher valuations in our strategic investments portfolio this quarter. On expenses, we're now expecting full year expenses to be, ex notable, to be closer to 5% year-on-year. This is off the back of higher revenue-related expenses, including a commitment to reward our talent for the organic growth that we are delivering. And as we also look at this expense forecast, I just want to remind folks that we do remain excited by the investments in both growth and efficiency that we had identified, we accelerated and we actually talked a lot about in -- on the second quarter call that we can talk about more, of course.

Yes. And I guess, just because there's, I guess, some questions. So I guess, on the fee income guide, up, say, call it 8%, I guess, ex waivers. And then on expenses, I think you were talk -- the upper end on expenses, you were talking about up 4%, and now you're kind of thinking up closer to 5% driven by, I guess, more on the employee costs.

And also revenue-related, revenue-related costs, yes, given the strong fee -- the strong results in terms of fee income.

Okay. And I guess, maybe we could talk about the net interest income side of the house and then fee waivers. But I guess, rates haven't quite filled the forward curve since the end of last quarter. I think on the July call, you talked about down 14% for the full year. I guess is that still your expectation? And maybe you could just address fee waivers. I know kind of 1 month LIBOR is kind of running that 9 to 10 basis point range kind of both the mid-June actions, but kind of ticked down to 8 basis points in the last couple of weeks. So how do you feel about that?

Sure. So as it relates to NIR, so you're right. I mean forward rates have definitely come in from the last time we guided. Having said that, we still -- our guidance for NIR for the full year remains unchanged at about 4%, down 4% year -- 14%, sorry, 14% year-on-year. While the lower rates and as well as we've seen a bit higher prepayment fees than expected, while both of those have been headwinds, we have been able to offset that with just modest changes in our securities portfolio as well as our balance sheet mix. So that's the gist on NIR, it remains unchanged. On waivers, look, the Fed adjustments to their administrative rates at the end of June were helpful. That really put a floor under repo and T-bill rates, which frankly are the biggest drivers for waivers. Also, money market fund balances are pretty much trending flat. So there really is no change in guidance for waivers. It remains -- the outlook remains unchanged. And I just would -- as I say, that I would remind you, that we are expecting roughly a $15 million pretax income benefit sequentially from the change in rates on LIBORs.

Right. So that's unchanged. Okay, that's helpful. I want to jump into buybacks, but let me pull up before I go there and just spend a moment on deposit strategy, which obviously drives some of your capital distribution capacity. Maybe just talk a little bit about your deposit experience so far in the third quarter. I think State Street talked to a decline, Northern kind of mentioned a stabilization. And just maybe your expectations near term and for the remainder of the year.

Sure. So in the second quarter, I think we were probably one of, I think, if not the only bank that actually reduced average deposits, albeit very, very modestly. It was only about $3 billion. But that was very much in line with our deposit strategy and our capital management strategy. This quarter, we're expecting average deposit to continue to decline probably to the tune of topping $5 billion to $10 billion. That's against the backdrop, of course. All the -- Fed data is telling us that average deposits are actually growing probably closer to 1.5% to 2% across the financial services industry. The way we're doing it is very similar to what I've talked about in the past, very constructive conversations with clients about off-balance sheet alternatives. We're very focused, of course, on nonoperating cash, the excess cash that we'll ultimately receive when rates eventually normalize. We're also -- we're fortunate in that we have one of the largest digital liquidity services platforms in the world. So we offer not only our own fund lineup. And of course, in Dreyfus, our fund lineup, I actually just talk about the fact that we have optimized our lineup. And actually, it's -- with the feedback we're getting from clients, it's incredibly competitive and scalable. So we're benefiting from that in terms of our own inflows. Likewise, we offer third-party fund solutions and of course, direct investments in repos, CP, CDs, T-bills, et cetera. So all of the -- we have a lot of alternatives for our clients. And up to this point, it's been a very successful effort. You can see that by the fact that we've been able to proactively manage the deposits. Our clients have been very receptive. But in the end of the day, the trajectory of the balance sheet will be somewhat dependent upon the Fed's policies going forward.

Fair. And I guess, you announced this $6 billion buyback through the end of next year. On the last earnings call, you talked about roughly $2 billion of excess capital at the end of 2Q. And you kind of mentioned the intention to potentially front-load some of the share buyback. I don't know, any chance you can give us an update on your buyback capacity and just how you think about the trajectory of buybacks going forward.

Sure. I mean just real quick, taking a step back and just talking about capital management, our capital management strategy in general. First and foremost, we look to make investments that drive profitable growth. I mean that's the most important thing. And as Todd alluded to, as we'll probably continue to talk about, there's many compelling investments that we are making because we think they do have a very strong ROI and will achieve profitable organic growth. Our business model, as you also know, is very capital-light. So what that allows us to do is make the investments we're talking about as well as return roughly 100% of our earnings to our shareholders in the form of, obviously, dividends and buybacks. You rightly point out that we entered the third quarter with about $2 billion of excess capital, measured by, of course, our binding constraint, which is still on top of our Tier 1 leverage ratio based on our internal buffer that we hold. So it's safe to say that based on having that excess, now basically, you can probably see, that in light of the excess that we have as well as our earnings power, we've been very actively buying back stock this quarter. In terms of what that's going to look like going forward and the trajectory, of course, the pace and the size of the buybacks will obviously depend upon economic conditions. There's a bunch of uncertainty out there as well as the size of the balance sheet. We still think we have probably $25 billion to $50 billion of excess nonoperational deposits on the balance sheet just to size that. And again, that will -- those will recede when rates do eventually normalize. And we are comfortable, we also said, dipping into our internal buffer for a short period of time if necessary. It doesn't look like that's going to be necessary, but if necessary. So all else being equal, it's safe to assume that our buyback activity will remain elevated, certainly, while we have this excess capital position and certainly, while as these excess deposits begin to do normalize over time.

Got it. I guess one of your closest peers announced its second major acquisition in the last 3 years. In contrast, you're committed to kind of growing organically and buying back stock as we just talked about. Todd, I guess, do you have any kind of updated views on your appetite for M&A?

Yes. So I mean, you made the point, we are focused on organic growth. That doesn't mean that we won't take into consideration inorganic growth opportunities if they present themselves. So we're constantly -- we do have a team. We're constantly looking at what the market -- what's going on in the market, what opportunities might be there. I mean as Emily explained, the bar is very high. We -- when we look at something, it has to achieve our cost of capital, which I -- the way I look at it, it has to be superior to a buyback. And that consideration needs to take into consideration the opportunity costs associated with doing it. And a major acquisition is incredibly distractive -- distracting. It did -- while we're innovating, developing new capabilities and so forth, you're converting. So we take in the opportunity cost that would go along with the transaction as we think about it. That being said, we have done a number of smaller bolt-on acquisitions. Most recently, we did the Milestone acquisition, which was a pretty neat little piece of technology, which gives us the ability to do what we call an automated or hands-free net asset value calculation for fund families. And we can do that either as an alternative NAV or do it as a backup NAV if needed. And it's a very efficient way of doing that. What came with that is some pretty interesting talent as well, which I think are going to be able to help us grow in some specific markets. And we've done quite a bit of fintech type of investment. So we've talked about something that we call Fireblocks, which is a -- which gives us a capability in the digital asset servicing area, which we're excited about. And we do have a fairly substantial portfolio. Those are strategic investments. They're not financial investments. They're kind of plug-in things that we are using somewhere in our ecosystem. And so I think we'll continue to do that. So if the valuation is there, if we think there's a high probability of retaining clients, we'll certainly look at them, but they've got to meet the bar that we've established for ourselves.

It sounds good. I guess now looking past, I guess, the next couple of months, where do you see the next leg of organic growth coming from?

Yes. I think if we kind of march through the organization, we do see in just about each of our businesses some pretty decent opportunities. I'll go into Asset Servicing. We've got something that we internally call the future of custody, but it's really automating and simplifying our custody network on making a seamless experience for the client. I think that will definitely help us as we build-out in some of the higher-margin areas of the world, in emerging markets, for example. ETFs and the need for our clients to convert mutual funds to ETFs or build out the ETF capability, we're very well-positioned to do that. Strong interest there. Still strong interest in alts, especially in the credit and private equity space. And then we've talked about our data and analytics capability. And I think we'll probably go into that in a bit more detail. So there are opportunities to expand with the services that we're providing within Asset Servicing. And I think we've got -- we're positioned against each one of those pretty well. On payments, we've modernized our U.S. dollar payments platform. We've enhanced the liquidity tools that we're providing. And we've actually built some pretty neat product off of the real-time payments network, which we're bringing. You'll probably hear us make some announcements shortly as we bring these products to market. And what we're finding, especially on the collection process, we can do some pretty neat things. And the relationships that we've built from the paper side is giving us the opportunity to build -- as to digitize that. And you're going to see more and more of that. The Collateral Management, I've talked a little bit about that, the -- our optimization capabilities that we've gotten, the interoperability that we're making around our investments in our tri-party collateral platform. And that interoperability, I think, will make us the -- just the preferred provider. And we'll continue to gain market share and see some conversion from bilat to tri-party as well. On the wealth tech space, I think we're going to talk a little bit about that if we get a chance. But we think there's just a heck of a lot of opportunity around Pershing. And we're doubling down there. We've brought in some new talent. We think that's going to -- yes, that's really going to contribute to what -- to that growth rate we can expect to see over the next couple of years. It's already a fast-growing underlying business. But we think we can accelerate that. And we -- and what we've done is we've started to accelerate the investments that are going to be needed to do that. So you're feeling some of those expenses now. You're not feeling revenues from that yet. On the Asset Management side, Newton's sustainability offerings are picking up some momentum. We're seeing some AUM growth there. We've got continued traction in ETFs. I mean we're a natural player for that. We're also seeing more and more integration with the new leadership in Investment Management across other parts of the organization. For example, enhancing the client experience through some of the things that we can do out of the Eagle D&A capability is one of them, also working more closely with Pershing on some go-to-market activities and also integrating some cash offerings out of Dreyfus. If there's any organization that sits in the middle of cash, it's us. And I think capturing more of that, and even as Emily talked about some of the deposit strategy, as much of that as we can keep in the ecosystem, the better. And we certainly have our own capabilities to do that as well as providing third parties. And the other thing that we've done recently is we appointed Akash Shah to become our Chief Growth Officer. And there's a lot of these opportunities across enterprise, pricing across the organization, and he's there to both ferry them out and drive them across the organization. So we do see -- I talked about we had decent momentum in organic growth. And I think executing against these various opportunities, we're going to be able to sustain that for some time.

It's, I guess, a nice list of opportunities. You mentioned a lot of them. Maybe you could just delve into 2 or 3 of them. I guess a couple that jumped out to me, I guess, one was kind of the whole wealth tech segment. Obviously, growth opportunities in the broader wealth ecosystem, but just maybe expand a bit on the opportunity set across Pershing and Wealth Management.

I would love to. So in Pershing, if you think about it, we have over 100,000 adviser clients that are sitting on that, the Pershing technology, the Pershing platform. We do business with about 1/3 of the RIAs that manage over $1 billion in assets. And it's really one of the fastest-growing markets. One of the things that we recently did, Jason, is to accelerate some of that growth momentum. We resegmented things within Pershing. So we created what we -- we created 2 segments. One is in institutional and wealth solutions within the Wealth business. And the purpose there was we've traditionally grown out of the brokerage -- the broker-dealer business. And as we see more and more of that moving to a kind of a singular -- it's going to be a singular offer to better support the conversion that we're seeing from the brokerage to the advisory side. And we've accelerated investments, I mentioned that. We've accelerated existing investments, but we're picking up on that further on technology, on things like managed account offerings, on making Pershing multi-custody and also developing our next-generational portal, so really enhancing the client experience. The other side of Pershing that we actually are pretty excited about is on the institutional side. So that's the second segment that we created, the institutional segment. And we are seeing increasing interest from large broker-dealers with more complex requirements, especially regulatory requirements, looking to take advantage of our scale, what we can provide to them, rather than kind of going through the arms raise of keeping up with the technology and the requirements that go along with that. So they're looking to variabilize their cost on our platform. And we have quite a nice pipeline they're building. So I think that kind of highlights Pershing. The second part of the story is around Wealth Management. And we brought in new management in Wealth Management about 3 years ago. And we really set up a relatively simple 3-pronged approach to our growth strategy there. The first was client acquisition and really focusing on larger clients. And since that's come out, we've not only increased significantly the number of clients, we're now seeing some real organic growth. Our assets under management and custody have risen meaningfully, and it's real organic, it's just not market-driven. And we've doubled the size of the average client over that time period. We've also launched our Investor Solutions, our OCIO solutions as well. The second thing we wanted to do was really enhance and expand the investment and banking offering. We probably were underutilizing our banking capabilities, and so given the fact that we've got some loan generation as well as deposit generation capabilities there, and we've actually connected some of that to Pershing as well so they can deliver banking services seamlessly to their clients. And we also opened up the architecture, so we made the investment architecture more open, which is obviously more attractive and attractive to our clients. And the performance has been excellent. So some of the relationships that we've been able to build through this difficult period of 2020, I think, will be lasting. And finally, we wanted to invest in the technology, just not for -- only for the client experience, but for also increased efficiency. And we were recently recognized as the best private bank for digital wealth management planning in North America by the Financial Times. So we're pleased with the progress. We're now starting to see that drop to the bottom line, seeing a little bit of organic growth. And I think we'll continue to see that to accelerate in the next couple of years.

And then you mentioned data and analytics a couple of times this afternoon. And I remember earlier this year, you alluded to some client wins in this space, but obviously, not a part of the business that's easy for us to track down from the outside. Can you maybe just give us an update on the traction beginning with things like your Data Vault and how meaningful that is or expected to become from a financial perspective?

Yes. So we have -- so we've been in the business for a while. We do have a significant number of assets on the platform somewhere in the vicinity of $42 trillion, so it's quite meaningful. And over the past 3 years, what we've done is we've expanded our offerings by developing a suite of cloud-native capabilities to deal with both the front-office use cases and also meeting some needs that aren't currently met with our clients around data management, performance accounting and -- which cater both to the middle and the back office. What we've launched recently is a number of applications, our ESG Data Analytics. We've now got 3.5 million securities on the app, with a very large number of sustainable attributes per security. That's gaining some traction. We've got a pretty cool growth dynamics capability, with not only in app, but also with -- when you connect it to some of the consulting that we can provide there. It's been a real differentiator for us. We've got something called the data studio. We kind of call that a playground for the data scientists, but it's the tools that the cloud service providers enable you to really do AI and machine learning around your data. And then you pointed out Data Vault. And so Data Vault is our next-gen data management system, building on the 20 years of experience that we've got. So what that actually is, it's a public cloud-based data management platform that supports the onboarding, integration, quality checking of structure and unstructured data. It helps the clients standardize the connections that they have and can get to the point of allowing them to basically outsource the hosting as well as the maintenance of the data platform. And we help them do that. We actually bring them through the implementation phase of that. So that is now available. And we've signed 3 deals recently, and there are pilot deals in the pipeline, and they're all multiyear contracts. We -- so in terms of how we look at it and from a profitability perspective, it's one of the distinct product offerings that we have in the Asset Servicing business. It is growing more rapidly than the other products. About 20% of the deals in our pipeline include a data component. So it really is kind of a differentiator. And there's innovation and thought leadership here that our clients are really looking for as they sign on for very long-term contracts. So we've been talking about this. We've been talking about the cloud enabler. It's now nice to see that it's actually starting to at least move the cash register a little bit with the deals that we've signed.

Interesting. I also want to touch on ETFs. I know you've been expanding your ETF capabilities. Can you maybe just give us an update on where you are on this journey?

Can you take that one?

Do you want me to -- sure. So the ETF market, obviously, is very attractive, and it's growing at a -- in a pretty incredible rate. So -- and that's across both passive and active. And I think the latest data from August, the AUM globally is about $9.5 trillion and up 40% year-on-year, so I mean, just the size of that market and the growth rate. And when we talk about ETFs and what we're doing as a firm, we look at it both across Investment Services as well as Investment Management. In Investment Services and in Asset Servicing, in particular, we ended June with about -- well, with $1.1 trillion of assets under custody or administration in terms of ETF and in terms of our ETF franchise. That was up 40% also year-on-year. We're gaining share in all segments, including existing -- with existing passive fund managers. We helped launch over 100 funds so far year-to-date, and several are in the new nontransparent actively managed space. And we're also a leader in the digital asset arena. So we've been mandated on 6 of the 11 Bitcoin ETFs that have been filed with the SEC. So we're just waiting on those to -- that will take a few months. But ultimately, we're operating in a different -- in different forms now, but they will switch over to ETF form when allowed. We're providing Asset Servicing capabilities for 11 of the 11 Bitcoin and Ethereum ETFs that are listed on TSX in Canada. We've talked about building out our own ability to custody digital assets in-house. So there's a lot happening in that space. And of course, also when you think about the ETF arena and Investment Services in general, ETFs are a higher-margin business, and that you get the custody, you get the accounting, the basket creation, valuation, distribution, you get the execution. So we're building out all of those capabilities in and under our ETF services franchise. In Investment Management, we launched in 2020 8 passive index ETF funds. We are gaining traction with those. We have in excess of $1 billion of assets under management across those ETFs. We just recently announced our first -- a launch of our first active ETF, which is the Bank of New York Mellon Ultra Short Income ETF. It's sub-advised by Dreyfus. So just net-net, I mean, between both the growth in the industry and basically our position, our ability to actually service these clients and these ETF providers across whether it be Asset Servicing, Investment Management, sec lending, execution, clearing, et cetera, I think we're very well-positioned, and we're seeing that traction.

Great. There's about 5 minutes left, and there are some questions from the audience, so maybe we'll hit on some of those. First, can you talk about some of the competition threats from fintechs and maybe DeFi more broadly?

Sure. So as I think about fintechs and what we do, and I think if you think about the counterparty risk associated with trading crypto, so if we go to digital assets in crypto, a trusted intermediary is needed there. And so the fact that we entered the space, there was huge interest for the institutional investors and now a little bit in the wealth space as well that are interested in something like crypto if we can help remove from them some of the counterparty risks that they're so concerned. So I think there's need for a trusted intermediary, really, if anything, is the team has compounded it. In terms of fintechs, as I mentioned, we are connecting with fintechs, giving them access to our client base as well as using them and tools to do things that we can do more -- far more efficiently. Well, I mentioned Fireblocks, I mentioned Milestone. We have a portfolio of about 35 different investments in it, that again each of them strategically to fill in, whether it goes from simple things like operations to help us automate certain things that we do or specifically, house, trade and manage digital assets. DeFi is an interesting space. I mean most of what's going on there is not directly competitive to what we are doing. But -- and elaborating on it a little bit, we think smart contracts is going to be -- is going to really gain some momentum. We think there's a terrific opportunity for us to gain efficiencies through it in our Corporate Trust space, one area where we're particularly focused. I think as you look at the space and the regulators trying to understand what's going on and you're especially seeing it now, it will be really important that there is a level playing field, that this isn't a shadow banking system that's going to try to replace the banking system while avoiding the regulatory side of it. So I think there's going to be -- as we're seeing it with -- happening in front of us, there's still going to be a need to make sure that we -- that there is a level playing field. And ultimately, I see -- we see a number of opportunities here. I think there's still going to be a very strong need for what we do. And I think we'll see growth out of it as a result.

That's helpful. Another audience question. Emily, given all the growth opportunities and an improving organic growth rate, how do you think about this from an expense management perspective? And how should we think about your expense trajectory going forward?

Sure. Look, we remain very focused on expense discipline and have been very focused on expense discipline over the years. I think a testament to that is that our expenses have -- were flat from basically 2017 to 2020, and that was while we actually increased our tech spend by 30%. So implied in that was $1.2 billion of savings that we then fully invested in tech and other areas. We believe it's incredibly important to invest and to invest through the cycle. As we've said, we're seeing some compelling opportunities right now across our businesses. We -- the success that we've had in terms of driving the organic growth that we've seen, that we talked about, it gives us the confidence that we are making the right decisions, we're prioritizing well, and we are executing well. All of the investments that Todd alluded to, they are driving -- there's an ROI, and they are driving growth or efficiency. It's a little too early to talk about the 2022 trajectory. We're going through the planning process as we speak. Obviously, we -- if we have high revenue-related expenses, that's great. Fee revenues will be up. Organic growth will be up. And when it comes to investments, our investments that we're making, again, it will be a rigorous governance process, prioritization process. So we're going through all of that right now. And when we are ready to comment, we will.

That's fair. We have 1 minute remaining. So I may just go to one last audience question. But what are your expectations for deposit betas in the next rate hike cycle?

There's really no reason to think that the deposit betas in this rate as we -- when rates do begin to rise will be any different than what we saw, call it, 2015, 2018. Just to share that, betas were about 25% for the first, call it, the first hike of 25 basis points, about 35% for the next 100 basis points and then about 90% once Fed funds hit 1%. So we're kind of expecting in and around that range to be pretty similar...

Perfect. Well, we're out of time...

If we ever get there.

We'll get there.

I think we'll get there. I don't know when. But on that note, Todd, Emily, thank you so much for joining us again this year, and look forward to seeing you soon.

Okay. Thanks, Jason. Great to be with you.

Thank you so much.

Thanks.