Investment Operations

BNY Mellon, Google Cloud Team to Predict Settlement Fails

Managed Accounts Operations Technology

The Bank of New York Mellon Corporation has confirmed a collaboration with Google Cloud to help market participants better predict billions of dollars in daily settlement failures, generate significant capital and liquidity savings, and unlock operational efficiencies. The initiative, which BNY Mellon says helps to extend its growing portfolio of emerging technology capabilities, will leverage Google Cloud’s data analytics, artificial intelligence (AI) and machine learning (ML) technologies to develop new collateral management and liquidity solutions built on Google Cloud.

BNY Mellon continues to heavily invest in advanced solutions that include the cloud, AI, ML and distributed ledger technology, said the bank. This collaboration is the latest example of its open-architecture approach of working together with leading technology providers to extend its capabilities in reimagining and delivering solutions to meet client needs. In addition to creating use cases for the U.S. Treasury market, BNY Mellon is developing AI-powered solutions for securities lending, liquidity forecasting, dynamic controls for pricing, anomaly detection for transactions, and automated document processing.

“This work with Google Cloud will develop a first-of-its-kind solution to help our clients predict approximately 40% of settlement failures in Fed-eligible securities with 90% accuracy,” said Brian Ruane, CEO, BNY Mellon Clearance & Collateral Management. “A settlement failure occurs when a buyer and seller fail to exchange cash and securities by the close of business on the scheduled settlement date. This prediction model could be a game-changer for market participants and is a tremendous showcase of how we are leveraging emerging technologies, such as the public cloud, to accelerate the delivery of meaningful solutions for our clients.”

Analysts say the U.S. Treasury market is the largest and the most liquid market in the world and BNY Mellon is the unique provider of clearance and settlement. On a typical day, approximately two percent of transactions fail to settle. BNY Mellon said it is using Google Cloud for its scalable data analytics capabilities and to train models on millions of trades to consider every value and factor that could result in a failure. This will help reduce client risk and create a more efficient financial market with fewer failure points and greater liquidity. BNY Mellon is also leveraging Google Cloud to support more development environments, making code delivery quicker while reducing infrastructure costs.

“BNY Mellon is building on its existing capabilities, using the latest cloud technologies to test and refine its approach to reduce treasury settlement failures, ultimately helping its clients save money and helping transform the U.S. Treasury market,” said Rob Enslin, president, Google Cloud. “We’re proud to have helped BNY Mellon use our leading data analytics and artificial intelligence technologies to transform the settlement and clearing process, and set an example for the industry overall.”

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