Morgan Stanley kicks new tech strategy into gear
Morgan Stanley CEO James Gorman has asked Rob Rooney, the investment bank's technology chief and leader of its international unit, to return to New York to focus solely on the tech part of his job.
In a memo to employees Tuesday, Gorman wrote that this move was a clear signal of "the rapid pace of technological change and the ever increasing importance of technology in both furthering our business leadership and protecting our firm and our clients."
Rooney started with the bank in New York in 1990, worked there for three years, then relocated to London for what was supposed to be an 18-month assignment in 1993 — he has been there ever since.
In a brief interview, Rooney explained that he was asked to take responsibility for technology 15 months ago alongside his international duties. He analyzed the current state of the tech organization and came up with a strategy that he presented to Gorman and the board.
“He’s now asked me to build and execute on that strategy,” Rooney said.
Asked what’s in the strategy, Rooney said: “Not a lot of rocket science. It’s a large organization, and the technology to transform financial services has arrived. We need to be innovative, and Morgan Stanley has both sides of tech demand in that we’re the world’s largest wealth management organization in the midst of a transformation. On top of that we’re a global institutional investment bank, with all the tech needs that come with handling equities, banking and fixed income.”
The bank has major initiatives going on in artificial intelligence, cloud, big data and analytics.
“We have enormous, staggering amounts of data for risk management, [anti-money-laundering], regulatory and other purposes,” Rooney said. “The use cases here are enormous. The job in our technology organization is to make sure we build a strategy we can leverage across the firm, otherwise it’s not efficient.”
On the wealth management side of the business, Morgan Stanley has developed a “next best action” system that presents human advisers with investment ideas they can share with clients. It uses predictive analytics and machine learning to comb through research reports, market data streams, and client databases to come up with insights about clients, market events and the impact of events on clients’ portfolios.
Rooney noted that though the system has been launched and the financial advisers are using it, “It’s never going to be completed. Machine learning keeps learning and getting better. As it gets better we’ll find more ways to use it, and broaden it out to more advisers.”
On the investment banking side, Morgan Stanley does a lot of tech M&A. Rooney said the bank’s technology organization helps the investment bankers understand tech clients and their products, making sure they know what is ahead.
Asked if the tech budget is being ramped up, Rooney said: “It’s not lower, but I wouldn’t say it’s being ramped up. We’re able to save money in some places, by becoming more efficient; we’re reinvesting that.”
Last year, Morgan Stanley deployed technology to automate several regulatory processes, for instance to comply with the markets in financial instruments directive and stress testing. That work will continue this year.
“There remains huge opportunity for us and for the industry to continue to work on automating processes,” Rooney said.
The bank is increasing its investments in innovation and cybersecurity, he said.
Wall Street banks have been under pressure to keep up with developments in technology on several fronts. On the wealth management side, robo-advisers have raised the bar for the types of software and mobile app interactions clients expect to have. On the trading side, state-of-the-art technology is always a competitive advantage.