How have technology advances reduced risk for financial services firms? Lisa Dolly, COO of Pershing LLC, a unit of BNY Mellon, explains. This is part of an EIU research series, sponsored by Broadridge. Read more: http://bit.ly/OpP14

1. CASE STUDY:OPERATIONS POWER PERFORMANCE
Operations moves into the limelight: A view from
Pershing COO Lisa Dolly
As sweeping regulatory changes and the pressures of
rising costs have become realities in the financial services
industry, operational efficiency has moved out of the back
office and onto the front line in roles shaped by customer
needs. To stay competitive, financial services firms must
rethink how they operate.
This mind-shift has resulted in a global response to
increased regulations, a move toward greater transparency
around complex market dynamics and new forms of
corporate governance arising from the 2007-08 financial
crisis. Industrywide operational transformation has
delivered a better experience for clients—who expect
top-end investment analysis, risk management and timely
execution in volatile markets. It has streamlined processes
to foster communication, merge silos and put richer
portfolio resources into the hands of customers.
“For Pershing, operational transformation really
means the opportunity to change the way that we are
conducting our business,” says Lisa Dolly, chief operating
officer of Pershing LLC, a unit of BNY Mellon, the sixth-
largest commercial bank in the US, according to the
Federal Reserve. “This transformation has at least three
components. First is to deliver a better environment for
our clients to efficiently operate in. Second is to mitigate
risk and become more efficient in our operations. And third
is providing scale and reliability to adapt to changes in the
marketplace from a volume and growth perspective.”
Rapid change makes transformational success a moving
target. As firms reach objectives on the road to
transformation, new goals emerge.
Gauging success is complicated—it’s an art and a
science. Step one, says Ms. Dolly, is to establish baseline
measurements for any process. “You need to know your
starting point, what metrics are suitable and which goals
matter most,” she says. Reducing transaction cycle time
requires measuring how long cycles take today as well as
weighing improvement against objectives.
When looking at efficiency improvement and risk, Ms.
Dolly cites work done by the industry aimed at shortening
equity settlement time to two days post-trade date from
three days currently. Experts widely agreed in the wake of
financial crisis that such a step would take some risk out of
the marketplace.
Technology advances have played a key role in reducing
risk and in providing new and improved tools for firms
and their clients. Routine upgrades enhance software,
enabling it to stay on top of high-frequency transactions.
The technology platform supports game-changing
transformation, including upgraded tools that fine-tune
risk management or algorithms that see patterns in text
and other unstructured data flowing across the Internet.
Innovative investment technologies bring investors closer
to markets, where customers and operations increasingly
share common space. However, true transformation
respects clients’ needs above all else. “The ideal concept
for us is that clients are communicating their needs,
which in turn helps us identify the optimal transformative
priorities,” Ms. Dolly notes.
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Successful operational transformation leans heavily on
installing the right people in the right roles, says Ms. Dolly,
who joined Pershing as a management trainee right after
college. Since her trainee experience, the training program
has been changed to accommodate new realities. “We are
focused on developing leaders instead of managers.” As
always, trainees move around the firm to build expertise
and professional networks, but in the end they are
expected to champion new ideas and promote useful
change—not just manage the businesses they inherit.
Given the significant internal and external challenges
as well as the complexity of technology, regulation and
compliance that face financial services firms, it is no surprise
that operational leadership is becoming a critical voice in
developing better strategies. Forward-thinking firms see the
importance of these solutions to meet the needs of current
clients as well as to win new ones. “As a COO you must pay
attention to what is happening in the marketplace and the
impact on clients,” Ms. Dolly says. “At the end of the day,
it’s about helping them to meet their financial performance
goals amid massive regulatory change.”
Despite the many benefits technology offers, it alone
cannot fully transform a business. “Cultural entrenchment
can sometimes impede progress,” Ms. Dolly warns. “There
can be reluctance to change based on the unknown and
part of our job is to understand, and even anticipate, those
concerns so that our customers can make an informed
decision.”
“True operational transformation changes the way we
manage our business,” Ms. Dolly advises. “It is not simply
moving people around, updating technology or adjusting
components of the business in isolation. Transformation
seeks end-to-end progress toward overarching goals.
The scope of one transformational initiative might have
far-reaching benefits—shortening turnaround times
on everyday processes; bolstering compliance and due
diligence; increasing the ability to handle transaction
volume; and reducing the need for manual intervention in
automated customer orders.”
Pershing assigns a high priority to the technology side
of operational transformation. “We have maintained a
consistent investment in our technology year-over-year
because of the critical role it plays in delivering solutions
to our clients,” Ms. Dolly says. From her perspective, the
most critical tools provide customers with resiliency during
challenging times.
All of this change can be daunting. According to Ms. Dolly,
Pershing tracked more than 200 potentially actionable
regulatory changes in the last year alone. To keep up
with these changes, Pershing hosts monthly compliance
meetings, where it can educate customers on regulatory
best practices and answer any questions they may have.
More broadly, across BNY Mellon, senior staff members
sit on boards, committees and industry task forces to stay
ahead of topics likely to affect customers, says Ms. Dolly.
Seeing change from inception bestows a useful advantage.
Open lines of communication can influence regulation
in the formative phase by highlighting overlooked
opportunities or alerting regulators to unseen and
potentially adverse consequences.
For more information on this case study, please
contact us at broadridge.com/OperationalExcellence
or call +1 800 353 0103.
About Broadridge
Broadridge Financial Solutions, Inc. (NYSE:BR) is the
leading provider of investor communications and
technology-driven solutions for broker-dealers, banks,
mutual funds and corporate issuers globally.
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