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When digital firms are pushing traditional behemoths behind to hog the limelight, here’s a 225-year-old US financial services firm that has not only survived the vicissitudes of the economy but transformed itself into more of an IT firm.
“It should come as no surprise that we’ve gone through countless changes as we’ve evolved to meet our clients’ needs,” Jay Hooley, Chairman and Chief Executive Officer, State Street, told BusinessLine while relating the company’s long journey.
The focus on technology is so much that the CEO remarked: “I often say we’re more like a technology company than a traditional bank.” “We want to help our clients keep their data secure, organised, current and accurate — so they can use the data to glean real-time insights to guide investment and risk-management decisions,” he says.
Founded in 1792 in Boston, the firm is celebrating its 225th anniversary. “So, we’ve been around a long time,” Hooley says.
It now has a team of 5,000 technology professionals working on a variety of technology areas, including artificial intelligence and Blockchain.
Of the 30,000 employees it has globally, the company has 2,800 in India, including 700 in Hyderabad.
As it strengthen its technology backbone to meet the requirements of its clients, the firm opened a tech centre in Hyderabad recently. Jay Hooley was here in connection with the expansion.
“The key to State Street’s success is its ability to keep ahead of change by listening to our clients and other stakeholders, understanding their needs, and anticipating where the market’s going next,” he points out.
He relates the major turning points in State Street’s history. “We have gone through two major pivot points. The first took place in the 1970s when State Street changed from servicing retail clients to servicing institutional clients with a custodial focus,” he says.
The second, its global expansion beginning in the 1970s and accelerating in 1980s. “Today, we’re one of world’s largest investment-service providers, with $32 trillion in assets under custody and administration, and the third-largest asset manager,” he says.
Data, the new currency
As digital solutions engulf all sectors, State Street sees financial firms have little choice but to embrace digital transformation, or face disruption and eventual obsolescence.
“We’re using digital advances to improve efficiency, gain new insight from data, enhance client solutions and expand the reach of our distribution channels,” he says.
Tech as catalyst
“We see technology as the catalyst for our continued evolution as a leading-edge data and analytics company. We’re midway through a 10-year initiative to further digitise our company,” he says.
“We’ve spent the past five years upgrading our systems, automating processes and integrating global platforms. Now we’re in the second phase of our journey to become the digital leader in financial services — what we’re calling State Street Beacon,” he adds.
Blockchain pilots
With the financial services sector recognising the importance of Blockchain to offer secure transactions, State Street is doing pilots in areas such as securities lending, syndicated loans and collateral management.
“For example, when borrowing securities from State Street a client posts collateral. We are piloting using Blockchain to create a digital record of how the collateral has been used, making it quicker and easier to return the collateral once the lending position has been unwound,” he explains.
In 2013, the firm established a new business, State Street Global Exchange, to focus on providing data solutions to help clients manage enterprise data and risk.
“It’s a small business relative to other State Street divisions, but growing fast. Our goal is to be the aggregator and integrator of our clients’ data,” he points out.