Ep. 187: Why We’re Still Struggling to Reach Full Digitization with Jim Crowley, Pershing

Come on in and sit back relax, you’re listening to Episode 187 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting and this podcast features interviews, news and analysis on the trends and best practices all around Wealth Management Technology.

My guest for this episode is Jim Crowley, CEO of Pershing. Jim has been at Pershing, believe it or not, over 40 years. He started in relationship management, moved up into the Chief Relationship Officer role which he held for quite a while, and finally, into the CFO position in 2017, and he is now CEO of Pershing.

The topic of this interview is something that we at Ezra Group spend a lot of time working on which is digitization. Going paperless, making end to end process without any paper for a wealth management firm. Now six or seven years ago, it was new and exciting, but now it’s table stakes. Most wealth management firms I would think will require it to even be running but apparently there’s still a lot of firms that haven’t taken the plunge or haven’t gone all the way paperless. Which is why Pershing launched an initiative this year called Paper Free in 2023. I spoke with Jim about this as well as other initiatives Pershing is working on including process automation, application integrations and digital experiences.

If you’re impressed by that and you’re an executive at a broker dealer, an asset manager or an enterprise RIA you should run not walk to a website, EzraGroupllc.com and fill out the Contact Us form on the homepage to meet with us about your technology platform issues. Our experienced team can assist with software vendor evaluations systems integrations, improving operational efficiency, software implementations and a whole lot more. You can take advantage of our free initial consultation offer by going to EzraGroupllc.com. Now, let’s kick this thing off!

Topics Mentioned

  • Paper Free in 2023
  • Driving Down NIGOs
  • Reaching Full Digitization
  • Delivering Real-Time Cash Updates
  • Biggest Tech Challenges for Advisors
  • How Have Other Custodians Respond to Pershing X?

Episode Transcript

Craig: All right. I’m excited to welcome to the program our next guest. It’s Jim Crowley, CEO of BNY Mellon | Pershing. Jim, welcome.

Jim: Well, it’s great to be here. Thank you for having me, Craig.

Craig: I’m so glad you’re here, and we are crushed for time because of technical issues. Let’s just jump right in. Jim, everyone knows Pershing. I’m not going to ask you for the 30-second elevator pitch. We’re here because you have a new initiative, I was interested to talk to you about it. It’s called Paper Free in 2023. Can you give us an overview of it and tell us why it’s important?

Jim: Yeah. Great. Thanks for the question, Craig. It’s super to be here. We started with our paper free initiative in 1986, and here we are in 2023, really pushing on it hard. We think it’s so important as the industry has transformed itself to more of a digital practice, that we start to get the paper out of the process. And because there are so many important reasons for doing it that we just feel compelled to get assertive with it, and our clients are happy and coming along with this as well.

Paper Free in 2023

Craig: I know Pershing as the third largest custodian in the RIA space, you have more than 7 million investor accounts, $2 trillion in global assets. I’m surprised that there’s even wealth management firms still using paper. How many are still using it then why they’re doing it this day and age?

Jim: You’d be surprised. It’s quite a wide range. You have some firms that have adopted the digital process. Some firms are up to 70-75% of statements, confirmations, tax statements, and other notifications that go out digitally. There are other firms that are at 20, 30, 40%, so there’s a wide range depending upon the business model. We’re impressing upon our clients and advisors and ultimately investors why it’s so important. Because of all the things that we all know are super important, whether it’s reducing greenhouse gases or reducing the amount of trees that we cut down. We cut down 24,000 trees in 2022 to deliver paper statements, which is remarkable. We use 22 million gallons of water to produce statements. We created 1 million pounds of waste product as a result of all the paper that we create, and it’s just not necessary. The digital statements confirmations and tax statements get there in the matter of a business day or two, rather than whatever it might take through the postal service. It’s more secure than a paper ending up in a mailbox. As I said, the speed, the security and the reliability of the digital delivery versus paper is just so important, and there is no more reason for clients not adopting a digital form.

Driving Down NIGOs

Craig: Besides speed, security and reliability. A part of the reliability is reducing NIGOs which nobody wants. We’ve seen some firms with 30% NIGOs that are still manually opening accounts.

Jim: Yeah, and you mentioned the opening new accounts, that’s where it all begins. Get the email address, get the telephone number, and it just makes the process so much more seamless to adopt digital. In fact, we did an upgrade in what we call NetX investor, which is the end investor portal for our clients, which was a one click pop-up notice that came. We had like 15% adoption rate just as a result of us putting a popup in front of clients each time they logged in. Just doing little things like that to remind them. But it all begins with the process at the very beginning, at the account opening stage. 

Reaching Full Digitization

Craig: There’s a lot of buzzwords in the industry, and one of them is digitization, and I don’t like buzzwords, but it just fits to what we’re talking about is we are digitizing here. Pershing’s been a leader. We appreciate that. Can you talk about some of the other initiatives you guys are working on around application integrations or digital experiences?

Jim: Well, look we’ve been in the API business for a long, long time, and that connects very much with what our clients are doing with technology and integrating technology. One of the new developments that we are working on in the area of digitization and eliminating paper is we are through our treasury services group at BNY Mellon. We’re rolling out real time payments, and that will reduce the number of first party checks that get delivered. Again, it will speed the asset movement process between investor and the custodian. It’s something that we’re excited about and something oddly enough isn’t mandated or prohibited by any kind of regulatory agency. We can mandate real-time payments, first party check delivery as a result of this technology. I believe that clients are going to find it super, super convenient. They are already doing it in all the other areas of their life, whether it’s buying something through their phone, through a direct website or through another third party. It’s about time the financial services industry caught up with other industries.

Delivering Real-Time Cash Updates

Craig: Speaking of real-time, another recent innovation, it was already a couple years ago, about delivering real-time cash positions from Pershing directly to portfolio management platforms. Our clients have had to go to the NetX portal to check their cash positions. I know you guys recently enabled that. I think it’s a huge boost for a lot of firms.

Jim: Yeah. Look, in investors and advisors today want real-time information. We have created APIs that allow our clients to pull into their proprietary technology stacks, real-time positions and balances, real-time cash positions, as you mentioned. It’s particularly important with volatility in the marketplace. People want to know what’s happening in their portfolios at any moment in time. Not that they should be making an instantaneous investment decision as a result of that, but they want to know and the information is there, it’s available. The technology’s here and we’re happy to deliver it to many of our clients.

Biggest Tech Challenges for Advisors

Craig: Recent surveys have shown that up to 77% of advisors’ report that managing technology is their biggest challenge. What are some of the other ways of Pershing is helping this?

Jim: It’s a big problem managing technology and Craig, you’re familiar with our launch of Pershing X which October 14th, 2021 is when Ainsley Simmons joined us to start up Pershing X. In June this year at our insight conference, we will be rolling out the product name for Pershing X as well as the platform more holistically. When we talk about technology challenges, particularly for advisors, stitching together the different single function applications, whether it’s CRM, whether it’s planning, whether it’s model management, trading performance reporting, billing, it’s a real difficult task. That’s where I think a lot of this challenge is coming from that you just mentioned, that advisors report on. That’s a big problem and we want to tackle that. With Pershing X, it’s one of the ways that we believe by creating a highly interoperable set of applications, we’re going to solve a lot of those problems. Maybe not every problem, we’ll eventually get to them. We have an order of operation, which has been defined by the advisors that are part of our advisory steering committee, and we will get to them all eventually. But we’re super excited about solving big problems. It’s no different than paper delivery. This is a big problem for industry. We want to solve it. Technology and managing technology is a big problem. Data and managing data and having it spin across the ecosystem, all the applications that people use, it’s a big challenge. We’re after those big problems, Craig.

How Have Other Custodians Respond to Pershing X?

Craig: Can you talk about the problem you may have had working with other custodians? How do they feel about the Pershing X platforms? You’ll be the first custodian that we know that’s offering a multi custodial platform.

Jim: I was the first person that had to be convinced that was a great idea to build a platform that would be multi custodial, because forever, right? That’s the custodians made money only by positions, accounts and balances that we held on behalf of our clients. But it was shortsighted. Being multi custodial is so important because we first need to solve the problem that advisors are dealing with that 77% problem that you mentioned. We believe that by being multi custodial and solving those problems that we just talked about, it will position us differently in the minds and in the operating system of every advisor that uses our tech stack. It’s a bit of a leap of faith. It’s trusting in what we are doing and in our strategy. We’re highly confident in it, and time will tell, but we’re on the journey.

Jim: At the very heart of the matter, Craig, what we’re trying to do for our clients is simplify the complex. If you think about the operating system today, you think about the product choices, you think about the regulation, all the different technology different tools that are out there, which you are so familiar with. It’s a complex operating system. If you can help you solve for all the complexity of the operating system. You have more time as an advisor to talk to your clients. We believe that that’s the right formula. Simplifying the complexity of the operating system, helping people scale their business, improving their productivity, and giving them great service. That’s our strategy.

Craig: That’s an excellent strategy. I don’t see how that can fail. Jim, thanks so much for being in the program. We appreciate your time, man.

Jim: Thank you.

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The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com

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