Anna Bernasek: I'm Anna Bernasek, Global Head of Thought Leadership at State Street, and I'm talking today with Donna Milrod, State Street's Chief Product Officer. Hello, Donna. Welcome. It's always a pleasure to be talking with you.

Donna Milrod: Hi, Anna. Great to see you again.

Anna Bernasek: Donna, what are you hearing from clients? About what they want from an asset servicing provider.

Donna Milrod: Our clients are looking for new ways to unlock growth, maximize value, launch and distribute new products, and be more efficient. They're looking for a trusted partner to support them across the entire investment servicing value chain so that they can focus on what they do best, delivering investment performance, making investment decisions, and managing their clients. In other words, State Street is an extension of our clients. By providing a holistic solution that brings clients our strength, scale, stability, and investments in innovation. We can serve as a strategic lever for our clients.

Anna Bernasek: Donna, let's talk about that for a moment. What do you really mean by a strategic lever for our clients?

Donna Milrod: Well, we have nearly $40 trillion in assets under custody and administration and are responsible for 10% of the world's assets. This means that we can provide the global scale, expertise and focus with solutions that are centered around data and based on integrated technology. That allows our clients to benefit from the investments we make as they execute on their strategy. We help clients bring new products to market and grow across asset classes and jurisdictions, while providing the flexibility they need to make the right choices along the way. We continuously innovate, help unlock insights, and improve decision making through enhanced data access across our core capabilities.

Anna Bernasek: Donna, how is State Street investing to achieve this vision, and how is that going to benefit our clients?

Donna Milrod: We think about it as investing in our core. Let me clarify what we mean by that. As a technology led company, since 2021, State Street has more than doubled our annual investment in technological innovation. We dedicate 20 to 25% of our operating capital to ensuring we maintain our market leading position. We spend more than $2 billion on technology development and operational efficiency annually.

Anna Bernasek: Could you give us some examples of what this means in practice?

Donna Milrod: Sure. We are evolving our custody offering into a global, interoperable ecosystem across our network, with digitized multilateral workflows and better access to custody data. For accounting, we are harmonizing data throughout the portfolio valuation life cycle. The same is happening in our administrative products. We ensure clients are ready for new rules and regulations with market ready plug and play solutions. A good example of that is the new rules around tailored shareholder reporting. The private markets administration space is another area of deep investment for us. We are working to provide private markets managers with a digitized experience that removes friction, particularly in credit and private fund structures. Finally, we prioritized a multi-year investment in our core data infrastructure to drive scale through automation so clients can retrieve their State Street information and data in new ways.

Anna Bernasek: Donna, thank you so much for your time today. It's great to really understand your vision for how we're investing in our core.

Donna Milrod: Thank you Anna. I was so great to be here.

Anna Bernasek: I'm Anna Bernasek, head of thought leadership at State Street, and I'm talking with Ann Fogarty, State Street's head of global delivery. Hi, Ann. Nice to be talking with you today.

Ann Fogarty: And likewise, Anna.

Anna Bernasek: And when it comes to the back office, why does delivery matter and how can it help our clients unlock growth?

Ann Fogarty: Delivery matters for our clients irrespective of what component or service, whether it's an accounting Nav across any product, middle office services, cash payments or settlements or transfer agency, any of the products touch our clients and they touch our clients distribution. They touch our clients brand in the marketplace and our clients reputation with the regulators who govern their product set. So good quality, consistent delivery builds trust, which allows and fuels growth. It allows our clients to trust us with incremental products and newer complexity. And most of all, it allows us ourselves to, with our clients, grow and evolve the industry to the next level.

Anna Bernasek: And how are we at State Street simplifying delivery of our existing services to clients?

Ann Fogarty: The simplification process starts, first of all with understanding. Okay, so we are documenting our process, understanding our control environment and documenting our procedures. That allows us then to become super clear on what a standard is and what a custom is. And custom means something unique. Once we have full understanding of that activity, we're then building through re-engineering of process. We don't want to automate something that's bad. We want to make sure we lean into geographical end to end process re-engineering, which is ongoing. And then most importantly, we are implementing new and modern technologies to bring scale to the core, to allow us to continue to grow in a very sustainable way for the future.

Anna Bernasek: How are we investing in the delivery of services that we know will be important for clients in the future?

Ann Fogarty: Anna, there's a number of factors to that particular question, and I would start by saying the foundation investments I've talked about earlier in the core are critical. Creating scale in delivery on areas that are process driven are very important. That enables optimization of some of the operating models for the future and for the future. We talk about where we see the market growing. We have significant opportunity in our private markets area, which covers our credit and private equity and real estate. And we're heavily investing in design now, optimizing some of the tools that are created for other processes so we can bring scale and quick growth to honor our clients requirements. In addition to that, we are very, very focused on the middle office growth, supporting onboarding of new business, which is not a mirror image of what we do today because it's bringing incremental new capabilities on our cash servicing and on our client reporting. So that is super exciting. And the last area that I would say in terms of where we see growth, significant ongoing change in the loan servicing area. So again, we're heavily invested in optimizing new technologies to be a leading edge provider in this growth area for the future. But the balance is always important. So making sure we honor trajectory for the future whilst protecting what we have today is critical. So it's the combination of those two bring us to the next frontier to honor our ambition of number one provider.

Anna Bernasek: And thank you so much for talking with me today. Great to hear about your roadmap for State Street's delivery.

Ann Fogarty: A pleasure, Anna. Thank you.

Anna Bernasek: I'm Anna Bernasek, global head of thought leadership at State Street, and I'm talking with Brian Franz, State Street's chief information officer. Hi, Brian. How are you?

Brian Franz: Hi. Great. Thanks a lot for having me today.

Anna Bernasek: Thanks for being here. Brian, you've worked in a variety of very different industries over your career. How does that experience shape your vision for State Street's tech roadmap?

Brian Franz: Well, you're right, Anna. In my career, I focused on technology and operations in diverse industries like the food and beverage industry, the telecom industry and financial services. And the common thread. The key insight that I take away is that every company today needs to think of itself as a technology company. What does that mean for State Street? It's really about promoting a culture of innovation that uses the tech tools we have today, while investing in future technology to transform not only our own business operations, but the products and services we offer to our clients. And because we're in finance, there's an added imperative of regulation. So thinking like a tech company can help us leverage tech tools for our own compliance as well as for our clients. At the same time, being mindful of the social impact of the technology we're using. Just to give you an idea of the size of our commitment, since 2021, St.jude has more than doubled its annual investment in tech innovation, dedicating 20 to 25% of our operating capital to ensuring we maintain our market leading position and spending $2 billion on technology development and operational efficiency annually.

Anna Bernasek: Can you take us through State Street's tech investments in the back office, and how that will help clients unlock growth?

Brian Franz: Sure. State Street's innovation agenda is led by client need. In essence, we invest in our own technology so clients have a partner that can help them navigate the future. Let me give you three concrete examples of what we're doing in the back office. First, we're investing in our core data offering. What does that mean? We help clients unlock insights and accelerate decision making with personalized access to real time data and analytics through a single source of truth. We do this across the investment life cycle for public and private markets, as well as using enhanced integration via APIs and digital collaboration solutions. So now we're prioritizing a year investment in our core data infrastructure to drive scale through automation, enabling our clients to retrieve their State Street data in new ways. Our vision is to be a leading API provider by delivering scalable solutions that enhance client partnership and integration, drive agility, reduce time to market, and increase operational efficiency. Second, simplifying our operations is an area where we see significant opportunity to completely revamp and streamline our operating model with technology powered by AI. For example, automating tasks like document extraction through natural language processing, reducing repetitive manual actions using bots, creating operational transparency and controls through machine learning, and using AI modeling for Nav computation. We see technology driven solutions applied to the entire business life cycle, transforming global delivery with the most significant investments in middle office, fund accounting and private markets. Finally, our robust platform enables clients to modernize their infrastructure, accelerate time to market and build stability, resiliency, and scalability into their operations by aligning resource and priorities across our functions. We're able to deliver change in a more agile and iterative way so we can move quickly on business initiatives, modernize the IT environment, and meet key regulatory commitments.

Anna Bernasek: Brian, AI is top of mind for our clients today. Where will I deliver the most value, both for our clients and for State Street? Well, at.

Brian Franz: State Street, we've been developing and implementing AI capabilities to solve business challenges and deliver real world benefits to clients for years. Today, we empower clients via a cloud native infrastructure and machine learning based automation at its core. This supports data and AI teams as they analyze data, build models, and produce meaningful insights to guide investment decisions. Then, when it comes to State Street's own operations, we're already using AI across our digital ecosystem. So things like identifying and escalating suspicious trade activity, powering natural language queries and self-service portals, providing predictive and prescriptive analytics insights, and flagging anomalous data events. In the next 2 to 5 years, we expect AI will continue to transform our clients operations as well as our own, so the benefits of AI will shift from front office all the way through to the back. Office.

Anna Bernasek: Brian, thanks so much for talking today. It's great to understand how State Street is investing in the back office.

* State Street as of 30 September, 2023