BNY Mellon chief rules out any front-office tech acquisitions

Earlier this year, BNY Mellon's Scharf proposed a move to an ‘open solution model’ where it will work with external providers and platforms.

By Joe Parsons

BNY Mellon’s chief executive has ruled out the possibility of acquiring a front-office technology vendor as the bank takes an opposing stance to its nearest custody rival State Street.

Speaking on the global custodian’s earnings call, BNY Mellon’s CEO and chairman Charlie Scharf exclaimed the bank has no plans in mirroring State Street and its acquisition $2.6 billion of Charles River Development (CRD) last year.

The comments follow BNY Mellon’s strategic alliance with BlackRock’s risk and portfolio management platform, Aladdin, which was signed earlier in April.

“We’ve been very, very clear that we don’t believe that owning a front-end [platform] is necessary or even the right thing,” said Scharf.

“Staying at the forefront of building capabilities on the front-end is an entire business unto its own that has changed and will continue to change dramatically. That is not our sweet spot.”

BNY Mellon’s partnership with BlackRock, where it would develop a front-to-back office data service for mutual clients, was among the main talking points for its earnings call. The partnership will involve integrating BNY Mellon’s data insights, accounting and asset serving tools with BlackRock’s Aladdin, one of the industry’s widest used investment operating platforms.

Earlier this year, Scharf proposed a move to an ‘open solution model’ for asset servicing where it will work with external providers and platforms to give flexibility and choice, as opposed to buying them directly.

He added on the call that it is open to partnering with more third-party platforms to deliver further value-added services for other non-Aladdin clients.

“What we want to do is make sure that we’re working as closely together as we can, not just on integrating capabilities, but working on common data sets in a whole series of things that do make the process much more seamless than it’s been,” said Scharf.

“That’s the journey that we’re on and we think that’s it would be extremely attractive to asset managers and asset owners.”