Innovation Competition Leads to New ADR Product at BNY Mellon

Custodian banks have the reputation of being slow-moving institutions without much creativity and excitement, but BNY Mellon is attempting to reverse this status by making innovation a priority through its firm-wide competition, A.C.E. (Accelerate, Collaborate, and Execute), which this year yielded a new type of ADR product.
By Jake Safane(2147484770)
A.C.E. Winners  
 

Custodian banks have the reputation of being slow-moving institutions without much creativity and excitement, but BNY Mellon is attempting to reverse this status by making innovation a priority through its firm-wide competition, A.C.E. (Accelerate, Collaborate, and Execute), which this year yielded a new type of ADR product.

Similar to TV shows like the U.S.’s Shark Tank and the U.K.’s Dragons’ Den (both based originally on a Japanese show, which has since been replicated globally), A.C.E allows BNY Mellon employees around the world to submit new business ideas in a competition that culminates with the firm’s executives granting project funding and a cash prize.

This year, A.C.E.’s second, employees submitted over 300 ideas, and after an initial review of the written submissions, the top ideas went through to a regional round where groups presented their ideas in person. Eight teams then went on to the final round, held on March 27 in New York.

At the finals, teams pitched their ideas in five minute increments, either in person or via videoconference, depending on the their location, to five judges comprised of members of BNY Mellon’s executive committee, including CEO Gerald Hassell. The judges then followed each presentation with five minutes of questions, and after hearing all eight finalists, they deliberated in a private room for approximately half an hour. In the end, the judges selected “ADR Plus” as the winner, an idea for a depositary receipt product that attempts to better manage cross-border investment risks.

In addition to the winning team sharing a cash prize of $125,000, the idea is sent to the BNY Mellon Incubator, a division of the company where products are developed faster by making them a high priority, where the team uses their requested funding to try to make their idea a reality. The ADR Plus team consists of six employees in New York and two in London, combining experience in both depositary receipts and asset servicing.

In addition to choosing ADR Plus as the winner, the judges selected a second place team from Brussels, whose idea is to facilitate Islamic financing by leveraging the firm’s Global Collateral Services business capabilities. The second place team receives a prize of $75,000, and a sponsor to help push the project forward, while the other six finalists receive $25,000. Other finalists’ ideas can still be pursued but aren’t guaranteed the same commitment as the winning projects.

One of the judges, Tim Keaney, CEO of BNY Mellon’s Investment Services, says that he was particularly impressed that nearly all of the finalists proposed cross-business ideas, and the toughest choice was choosing the second place winner. While the judges received the proposals two days prior to the finals, they did not discuss the ideas together until their deliberation at the end of the contest.

Despite the limitations of the competition in terms of time to flesh out ideas and allowing the executives to thoroughly examine what makes the best investment, the format seems to provide a boost to morale, based on employee surveys, and it creates a “healthy tension,” says Keaney. Employees also seem to agree that the reality-show style helps to bring out the best ideas.

“Competition is a great motivator. [A.C.E. is] our March Madness,” says Cherly Gurz, managing director, Treasury Services, who was a finalist in last year’s competition and whose idea around bank account validation now has a patent application on it.

The competition also helps address a challenge that custodians, or any large financial institution for that matter, face around culling innovative ideas from their workforce.

“When I think about innovation I tend to think of small groups of people who are very connected, spending a lot of time together, and they’re having fun, they’re playing. We encourage people to think about how children play, and innovation should feel like that,” says Kevin Ruebenstahl, managing director and head of product development for Depositary Receipts. “But how do you do that? How do you make a 50,000-person organization live small for people? How do you erase the miles in an enterprise scattered across the globe? And how do you create safe places in a market and business that is increasingly regulated and focused on risk. How do you create safe places for people to play?…A.C.E. is a great example of how we can, after a lot of trial and error, make this place feel smaller than it is.”

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