On the surface, a 200-year old bank still sporting a 19th century sailing ship in its branding wouldn’t be immediately associated with being a modern day technological pioneer. State Street’s logo was inspired by a clipper, a ship known for its resounding speed at a time when the bank’s hometown of Boston became a flourishing maritime capital. It stands for the bank’s history, a legacy State Street it is unmistakably proud of. But living in the past doesn’t cut it in the environment banks are now operating in. Some of the world’s biggest financial institutions are being forced to evolve and recognise a turn in the tide, especially when faced with the headwinds resulting from the 2008 financial crisis. This harsh reality has not been lost on Jay Hooley, State Street’s chief executive officer, chairman and the man at the helm of a ship looking to change its course. “If I were building this company today, would I build it very differently?” he asks. “Absolutely.” “It’s important that the industry remakes or transforms itself to take the latency and delays out of all these processes.” Technology, digitalisation and automation are at the forefront of Hooley’s grand plan for State Street. As one of the two biggest custodian banks in the world he recognises the importance of taking the lead on moving the industry forward. He also acknowledges the collective mistakes of the industry leading to this necessary course of action. “We have collectively created a developed market financial system that has too much latency, too many hand-offs, too many players moving data back and forth, too many reconciliations moving back and forth,” Hooley explains. “We are doing this because it’s critically important for us to feed back to our clients real-time. Any custodian focused on this market has to have this as one of their critical objectives. We need to clean up and automate the financial services infrastructure that we have all created over many, many decades.” “The objective is that when something enters our world for it to enter digitally. We take a digital record and pass it through our system and it comes out the other side without human touch. Hooley joined State Street 30 years ago and has worked his way to the top through a range of roles within the company, giving him an extensive view of both the bank itself and the financial services industry. This knowledge and experience has spurred his plans for a digital revolution within State Street. At the forefront is Project Beacon, a multi-year transformation programme to digitalise processes. The project is no secret; State Street plans to generate $550 million in estimated savings over the next five years, which will include staff reductions. “The effect will be lower cost, lower risk and the grand prize is that as we make our information available in real-time to our customers it will be the insights that drive their investment management, their risk management and their ability to generate returns. “It is the most essential thing custodians need to do to ensure they are relevant in five years time.” Hooley’s ambitious plans led to widespread news coverage of the bank shedding thousands of jobs, 7,000 by 2020 to be precise. These cuts are a direct result of the advances State Street is looking to make in a bid to move ahead of the pack when it comes to automation and digitalisation. “Some activities will become redundant. We wouldn’t be doing our job if we weren’t automating some activities that are today conducted manually. “We continue to apply technology to enable new product capabilities, to create more efficiencies and to reduce cost. The thing that is different about this next phase is that there is a fair amount of pressure in the industry around slow global growth, low rates, an influx of regulation and that’s converging with the evolution of advanced technologies. “There hasn’t been a point in my 30-year career where the opportunity has been so present and the need so great for firms to move.”
The CEO of Boston-based State Street, one of the two biggest custodian banks in the world, is planning to overhaul its business with technology, digitalisation, and automation. He urges the industry to follow suit in transforming and automating the financial services infrastructure to take "the latency and delays" out of all the processes. The bank's Project Beacon, a multi-year programme to digitalise processes, will save $550m over the next five years but cut 7,000 jobs. However, the benefits will be lower cost, lower risk and greater returns.