Fireside Chat Interview with Alejandro Perez, Chief Administrative Officer, BNY

How Co-Locating Talent Across Tech, Operations, and Client-Facing Teams Accelerates Innovation and Responsiveness

By bringing together diverse skill sets and perspectives, how can companies foster a culture of collaboration and creativity, driving solutions that meet client needs? In this fireside chat, BNY's Chief Administrative Officer Alejandro Perez will discuss the global bank's strategy in co-locating talent in order to break down silos, increase knowledge sharing, reduce time-to-market for new products and services and deliver a world-class client experience.


Transcription:

Penny Crosman (00:11):

Thanks everybody for coming to this afternoon session. This session's a little bit different. We're going to kind of talk about more of the human side of technology and managing technology teams and getting things done and and how you get things done, not just from a tech perspective, but from your people, where your people are and how they interact. So we're here with Alejandro Perez. He is Chief Administrative Officer at BNY. Do you want to sort of describe what you do as CAO?

Alejandro Perez (00:45):

Sure. First of all, thank you very much for hosting me, Penny. It's great to be here. Thank you for all of you who are here. So I'm the Chief Administrative Officer for BNY. Basically under my remit, our main goal is to enable our businesses, and we do that. The teams that actually are within the CEO office, our global operations, which is basically all the operations teams supporting every business in the bank, facilities, hospitality, our sourcing teams, procurement, third party risk management, accounts payable, and then resiliency and client onboarding. So when you think about the engine of the bank, it pretty much sits under the CAO office.

Penny Crosman (01:25):

Sounds like a lot. And what happened to the Mellon in BNY Mellon? Do you have an objection to fruit?

Alejandro Perez (01:33):

No, we are going through a deliberate and bold transformation at BNY. We have a rich history, 241 years oldest bank in the United States of America, founded by Alexander Hamilton. And when we took on this new chapter for the bank where we felt like we had a responsibility to create, to really just create the next 240 year of legacy, we also figured it was a time to revisit our branding. And as we did that, we did a lot of research and the feedback was that while Mellon was very much recognized in Pittsburgh, part of the Mellon Bank franchise outside of Pittsburgh, it didn't have the same level of recognition. So we took the opportunity not just to change the name, but all the color of the branding and freshen it up. We've gotten great feedback on it.

Penny Crosman (02:26):

Alright, so this co-location project, can you tell us what prompted it? What was the situation that you were living with that you wanted to make a change to?

Alejandro Perez (02:39):

Sure. It's really for us, it's a location strategy program that we started at the firm three years ago. So in August of 2022, I had just been appointed or I was about to be appointed chief Administrative Officer for the bank. We had Robin Vans taking over as CEO. And what we notice is when we first look at a real estate portfolio, we had a lot of offices spread across the globe with people spread across the globe and no real strategy behind it or real science behind it. And this was basically a consequence of, again, 241 years of acquisitions, mergers in some cases, some business activities, new business activities, but there was no real integration or rationalization of where our teams were located. So the first goal was to, can we reduce our footprint? We had about 40% excess real estate capacity by the way that's coming out of COVID.

(03:40):

When after COVID, we realized that there's an opportunity to share the workspace. This concept of everybody has to have a desk. It's no longer as relevant as it used to be. So we immediately got together, created a central governance team, and review every one of our locations and determine where do we want our people to sit and where do we want our people to co-locate so that we can be more productive and innovative? And we looked at the sites where we had our teams first, but then we took into consideration things like talent. Where is the talent available, particularly from universities. We want to make sure that we have strong relationship with the universities around our main hubs like our strategic global locations. And if you think about it, in Pittsburgh, we have a very strong relationship with Carnegie Mellon University, where we do a lot of work with the faculty on AI here in Florida, just north of here.

(04:33):

Lake Mary is another strategic global location for us in there. We have a very strong relationship with University of Central Florida where we do a lot of work on cyber. So talent was very important. Then risk was also something we took into consideration. Wanted to understand what are the risk implication of each side? Concentration risk, where do we have our people? Then obviously client location. We want to support our client from our sites across the globe. 40% of the revenue of BNY comes from outside the United States. So it's important that we have employees based around the globe that allows us to support all our global clients in a follow the sun model. And then last but not least, it was cost. We wanted to make sure we could optimize the cost model and we could extract some of the operating costs that was just too burdensome at the time. So that's really what the impetus of what is our location strategy today.

Penny Crosman (05:31):

So how did you go about bringing about change? Did you decide what your core locations were going to be and then how many people you wanted to have in each location and which teams made sense for each location?

Alejandro Perez (05:44):

Sure. It's been a journey. So we started, as I said before, okay, we can reduce our footprint, reduce our operating costs, which we did in the first two years. We've saved the firm about a hundred million. Running operating costs just by closing size that are not really strategic for us. But then we determine, okay, we have our market centers in New York and London, New York being obviously our headquarters. And then we have our strategic global locations where we're going to have most of the disciplines together, the bulk of our employees. And those are Lake Mary, just north of here in Orlando, like Mary, Florida, Pittsburgh, as I said before, Manchester in Europe, Russell of Poland in Europe. And then in India we have two offices, one in Chichen, nine, another one in Pune. Now we also have 14 business hubs where again, we have people working smaller scale in the hundreds working together to support local clients.

(06:44):

So think about Boston for example. Frankfurt, Luxembourg, Singapore, those are smaller centers. And again, we deliberately selected each of them based on our client needs and locations. And then we have client centers where it's mostly sales team, business development teams. Once we selected those, the key was to create an identity for each of the strategic global locations. We didn't want every location to be everything for every business. What we decided to do was identify where should each business and platform be located to better serve their clients. So Pittsburgh, as I said before, AI is a major hub. Florida, as I said before, cyber, but if you think about our payments business, treasury services, key teams are in Manchester and in Pittsburgh. When you think about our alternative business, most of the teams are in Poland and India. And that's what we've been able to rationalize our team and then bring all the roles, all the disciplines for those business, not just operation and engineering, but also client service, product development. In some cases, sales, bring them together so that we can innovate faster and we can be more productive.

Penny Crosman (08:00):

So did you get rid of some locations altogether? How many did,

Alejandro Perez (08:05):

We did, we have gotten rid of about 30% of our locations. As I said before, we had a large number of offices that were almost either empty or just pretty much nomad. So we've really come down about 30%. We have over a hundred offices right now and we're still reducing that portfolio.

Penny Crosman (08:29):

And did a lot of people have to move to get this integration you wanted?

Alejandro Perez (08:35):

Sure. No, people don't have to move per se. We obviously encourage team members whose roles are moving and we want to support them and facilitate that move. But not always. People will move for obvious reasons and we're not forcing people to move. Either those who can't move, we try to find opportunity for them in the location they're at. If the site is closing, then there's nothing we can do about it.

Penny Crosman (09:06):

So what does it look like now? Is every team together in a specific location? They all sit together.

Alejandro Perez (09:12):

We're not there yet. It's a journey. You can't really switch overnight because again, we have a lot of expertise and tenure that we don't want to just simply lose. But the way it's looking now is, like I said before, we have our platform operating model where our firm is becoming a platforms firm, which means at the same time we're adopting an agile model. So everything is happening in two week sprints. And this is not just in engineering, this is across the firm. Everybody's operating in two week sprints. So the only way you can make those work, you can make decisions quickly is by having people sitting together in each of these locations. It's very hard to operate at the speed that we're operating today and drive the kind of growth we're driving, having people sitting in one region waiting for another region to make a decision or to action something before it gets back to them. So that's where we have this team together now. There's still a lot of work to do, but we started that and we're seeing great benefits.

Penny Crosman (10:19):

It almost seems like you're going back to the way things were before BNY was such a large company, and once upon a time people did sit together in smaller business, in most smaller businesses anyway. So with this, did you have a return to office mandate?

Alejandro Perez (10:37):

Yeah, so we do. We have a four day requirement to be in the office. We actually just announced that it used to be three days and four days for managers. And we announced about a month ago that everybody's going to be in the office four days a week, which four days is up to the employee and their manager and the team because we want people to have the flexibility of which day if they choose. We're not saying you have to only come in four days, you want to come five days, I come five days, it's up to each employee. But what we did is going to actually, that is going to start in September because we recognize that people have to basically have to make arrangements at home and in their personal lives to be able to come into the office for days. But we felt that at this time we have enough data that has led us to believe that a culture of apprenticeship, collaboration and innovation, which is what we are developing at BMY, requires people to sit together and work together as much as possible. So that's why we move to the four day.

Penny Crosman (11:43):

We recently ran our best places to work in FinTech program, which we do with best companies group. And one thing I noticed was that all the fintechs still allow remote work and in most cases a hundred percent remote if people want to. And I asked people, do you think this is a competitive advantage to you in hiring tech talent? And people did say yes, but it wasn't so much that they wanted to be home every day. It was that they wanted the flexibility to be able to handle childcare issues and go to games and things like that. So do you worry about that? That might be a factor for you?

Alejandro Perez (12:22):

To be honest, we don't worry about it. We don't think not having a remote or fewer days in the office is going to sacrifice the level of talent we're getting. To be frank, the early talent. So this summer we just, last week, I'm sorry, this week we have 1500, 1,500 summer interns starting at BNY across the globe. And in August we're going to have a class of 1500 analysts again started at BMY. And overwhelmingly the feedback from those individuals is that they want to be in the office, they want to sit with their colleagues, they want to learn from their colleagues. So the feedback we're getting actually, particularly from that population is that they want to be in the office and they want to be with their managers in the office. They don't want to just be sitting by themselves. So to be honest, no, we haven't seen, we're not concerned about losing competitive advantage when it comes to recruitment. In fact, I mentioned in Carnegie Mellon University and in University of Central Florida, we're now negotiating some space that we're going to lease inside the campus. And there we're going to have employees working alongside with students just to get that collaboration going and the brand awareness. So that's how we're also competing for talent by getting closer to the students and educating them on what we do. And what are their opportunities when they join BNY and they see it on campus, right? With us, with employees from our firm.

Penny Crosman (14:04):

And you did this to improve collaboration and help with decision making. Have you seen those benefits?

Alejandro Perez (14:12):

Oh yeah, absolutely. I mean, we've seen benefits on employee engagement. So if you think about it, many of these offices were there before, completely uninvested, underinvested. And what we've done is, I said before, Hey, we save about a hundred million dollars in ongoing operating costs, but we took a lot of that and we're investing in the locations, we're staying and we're creating a modern environment, open, collaborative. We're bringing amenities to our office that we never had before. Gyms, roof decks, baristas, free coffee, prepared drinks, and people actually are super engaged. You go to offices every time I go back to Lake Mary where we have something new opening up or Pittsburgh or Poland where we just move into a new building. I mean, employees are really proud of being at BNY and the work they do and they feel recognized. So just from an employee engagement has been massive success.

(15:06):

Client has also been a great success. NPS, the net promoter score from 23 to 24 increased from 41 to 57. And that's the score that suggests where the clients are actually going to recommend BMY or not. And a lot of that has to do with the service they're getting now that is faster and is more efficient than it used to be before. And then from an operational errors point of view, we're seeing a lot more transparency when we have issues before those issues were either buried or will come back late and after quite some time. And what we're seeing now is this issue are permeating and escalating a lot quicker just because we have a lot more people working around the clock or around the globe from all levels, senior leaders and juniors teams as well.

Penny Crosman (15:57):

So that's interesting. If a problem was getting buried in the past, is it just because everyone's working more closely together that it's harder to hide something?

Alejandro Perez (16:06):

That, and also a, an interesting phenomenon, it used to be the location strategy for many banks was, okay, I'll find a cheap location, I'll find a low cost location, and I'm basically going to offshore or near shore if you want to call it that way, because it's in the same country, all the junior roles so that they can process all the great ideas that we come up with in New York. And that's what we've changed fundamentally, right? The ideas now take place in each of these locations. The managers and the leaders are sitting in these locations. We're empowering these locations to basically take control of their destiny and use the tools that are available to them to be able to innovate and grow the business. All we provide is governance to make sure we have consistency because we want consistency and we want orchestration across the globe, but with a local flavor. We like to say we think globally, but act locally as well. So just bringing the managers, the teams together versus just having the mundane low cost jobs by themself in these locations has transformed the way we do business.

Penny Crosman (17:18):

Is there anything that someone from a smaller bank, maybe a community bank, might take away from this experience you had?

Alejandro Perez (17:25):

So I'm glad you mentioned that because we care tremendously about our community banks. We at BNY believe and remain focused on an inclusive economy, and part of that means community banks play a critical role to serve the local economies, particularly those underserved economies that don't have other bigger institutions fueling the local businesses. So what we've done is we have a team that actually work closely with community banks to extend this infrastructure and these capabilities that we've been building over the last many years, but particularly the last two years. So while these banks don't need to worry about, okay, I got to set up an office somewhere else in Pittsburgh to attract some of these AI capabilities, we want to extend those to them and work closely with them so that they can continue to serve the local community. So it's a great opportunity for us to do more for an inclusive economy by working with these banks and extending our,

Penny Crosman (18:28):

What does this partnership look like? Do they take rent office space from you?

Alejandro Perez (18:33):

Not so much office space. They have plenty of office space. It's different forums. Can you hear me? Oh, we have a particular bank, PON bank, where we are basically managing part of their infrastructure out of our treasury services business. We're about to launch a series a thought leadership series, and we're going to publish a white paper, the voice of community banks. So it's just also letting, giving them a channel to articulate their mission, what they're up to, and then again, what are the challenges and the opportunities for them. But it's mostly about letting them use our payment rails, our capabilities at the right cost, a cost that makes sense for them so they can be viable and a cost that makes sense for us. So they sustainable for the bank and all the businesses.

Penny Crosman (19:27):

So the CEO of ANTHROPIC said, as Holly mentioned this morning, that AI is going to eliminate 50% of white collar jobs. What do you think of that? What was your reaction to that?

Alejandro Perez (19:40):

So we definitely believe that BNY that AI is going to have a meaningful impact in the business world financial services. But beyond financial services, we are very focused on ai. As I said earlier, working closely with Carnegie Mellon, we have developed around ChatGPT, like application, working with multiple LLM large language models, including OpenAI. We just announced a partnership with OpenAI. We have a partnership with NVIDIA and Microsoft as well. For us, what we've done is we democratize the access to ai. So we have provided access to these application, Eliza to every employee in the organization. We're providing training resources, bootcamps, because we believe that it's going to allow everybody to be much more productive. It's going to allow people to get rid of the mundane tasks that nobody wants to do. Reading documentation, interpreting documentation, moving data from one screen to another or from one application to another.

(20:46):

Get rid of the nonsensical work that sometimes is required due to tech limitations, et cetera. And then allow our employees to be much more productive and be more engaged. I also believe rather than focusing on what is going to be the percentage reduction in the workplace, for us, we have a 10 x mentality. For us, it's about growth. That's our key focus and that's what we've demonstrated in the last two years. So to be able to grow with scale is what AI is going to allow us to do. We don't want to keep hiring at the pace we are because sometimes it's not sustainable. So AI is going to allow us to continue that growth with the level of scale we have today, as long as we can arm and upscale everybody in the organization.

Penny Crosman (21:32):

What are some of the ways people use generative AI in the company today?

Alejandro Perez (21:37):

In operations, in sales, we have an application fund benchmark dynamic benchmark whereby we produce navs net asset value reports for our clients. Now we use AI to compare those to other clients and to compare those values to historical values and detect any anomalies and then investigate them. We have a lead generation agent and that allows us to, for the sales team, that agent will look across our client base and compare similar institutions and what they do with us or what they don't, and then suggest opportunities for us to engage with someone that is perhaps not engaged in a particular business area. We have our first digital employee. It's a prototype, we haven't yet finalized it, but again, we believe in the payment area, payment correction area. That's an area where, again, very mundane, a lot of false positives. We have an agen platform client onboarding as well, another agen platform performing all the research for KYC nor your clients and a ML and time money laundering. So we have about over 50 applications, AI applications in production today and more right now in review.

Penny Crosman (23:00):

All right. We have four minutes. Do we have any questions in the audience? So what is next for you in this whole co-location effort that you're doing? You said you're, did you say you're 30% in, or no,

Alejandro Perez (23:16):

Excuse me.

Penny Crosman (23:18):

How far along are you and what's left to do?

Alejandro Perez (23:21):

So right now, for us, it's twofold. It's continuing to bring the teams together based on the businesses and where their strategic location goals are. It's bringing more of the leadership is continued to deepen the relationships with university, not just in Pittsburgh and Lake Mary. We have great relationships in Manchester, in Poland, and in India, but it's looking for ways to get closer to the students, to get closer to the research that is taking place at these universities because we can benefit from that. So that's another area that we're very focused on. It's really continuing to invest in the workplace. It's a very fluid and evolving theme. It's like technology. You come up with a space looks great five years later, it starts to show age and it's just staying current so that we can continue to attract the best talent so that people feel like they come to the space, to our workplace to learn, to collaborate, to socialize and have fun, to be honest, work hard and have fun. I don't think it ever finishes. It's always evolving with our business. We will have new locations too. I mean, we're not just fix our location. Footprint will not remain fixed depending on which mega trends we latch on, which new businesses we come onto or which new capabilities we develop. We'll end up in other places as well. Perhaps in Asia Middle East where we have small offices, I can see us increasing our footprint there down the road.

Penny Crosman (25:02):

What if somebody works on multiple teams or oversees multiple teams? Where do they sit?

Alejandro Perez (25:08):

Yeah, so that depends on the individual. Many of our senior leaders are spread around the globe. To be honest. We have a high concentration in New York that's historical, that was accumulated historical. I do believe that over time we're going to spread, we're going to distribute our senior leadership so that again, it compliments with each other and we can have a true grasp on the firm globally because the reality is having everybody in the center doesn't necessarily make sense long term. But I think over time what you see is that senior leadership just continuing to expand across the globe and they'll see where makes sense based on where their teams are located, whether it's Europe, whether it's Americas the US, or whether it is even in Asia where we have a big presence in Singapore.

Penny Crosman (26:04):

So has this led to less travel for people like yourself who oversee a large group?

Alejandro Perez (26:10):

No. For me, I'm traveling constantly, but that's because I'm responsible for more than a hundred locations. But I don't know if it'll be less travel. But it definitely, like I said before, it will be about speed to market growth. And most importantly, culture. We really believe, if you think about our three strategic pillars, it's all about be more for our clients, run our company better, which we're doing by, again, optimizing our real estate footprint, but power our culture. And that's super critical here. And when we think about our business, our five business principles, one of them is strive together. That's really what we care about. We want people in each of their offices. When we attract talent to any of our offices, we want individuals to feel like they have a career of BMY. They don't have to be in New York to have a career that they can grow in BMY in any of our locations, our key locations. And that's really what we're after.

Penny Crosman (27:12):

Makes sense. Well, we're out of time. Alejandro Perez, thanks so much for joining us today.

Alejandro Perez (27:16):

Thank you Penny. Thanks for having me. It was great to be here. Thank you.