CIO Alan Goldstein Operates BNY Mellon AM's Technology with Surgical Precision

For the last 14 years, Alan Goldstein has risen steadily through BNY Mellon’s management ranks. Today he heads the firm’s asset management and international technology, a far cry from his initial West Coast career choice.

There was a time when Alan Goldstein thought he would sooner have his hands in someone’s chest cavity, trying to keep the poor soul alive, than inside a server, trying to breathe new life into a datacenter.

Back in the day, Goldstein spent several years dealing with actual life-and-death situations—long before he became CIO of BNY Mellon Asset Management, he was a paramedic riding shotgun in an ambulance through the streets of San Francisco.

After studying medicine for a couple of years Goldstein had a choice: bury his head in books for the next 10 years to earn his doctorate or get some real-world experience in order to make sure that this was what he wanted to do with the rest of his life. He chose the latter.

Goldstein soon came to the conclusion, though, that practicing medicine wasn’t what he thought it would be. So he left the field. Somewhat adrift, he took some advice from an old friend and started studying computers. Oddly, however, his experience in the world of medicine would serve him well in the years to come.

Learning on the Job
Similar to his previous career decision, Goldstein took a couple of computer science courses and then got a job in the field, rather than opting for a master’s degree in computer science or engineering. After all, it was the early 1980s and you could still get your education on the job.

After working as a consultant in the US and Europe for firms such as Deutsche Bank, Merrill Lynch and Credit Suisse, Goldstein landed a job as CTO at venture-capital startup Bondnet Trading Systems, the first fixed-income exchange provider. In 1997, Bank of New York bought Bondnet. Fourteen years later, and after a merger with Mellon Financial, Goldstein is still in technology and still with the same company. Yet he doesn’t look back on those years in medicine as wasted. On the contrary, he says that experience was vital in shaping him into the man he is today.

“I consider those years as a paramedic to be a key part of my education,” he says. “I learned a tremendous amount about life and one of the parts I liked most about medicine was the diagnostic process. It required a very structured approach to problem-solving and, of course, learning to stay calm in an emergency is a handy skill to have when working in technology.”

After spending years dealing with medical emergencies, Goldstein now has the steady hands to lead BNY Mellon’s technology with surgical precision.

‘I Want to Do That’
It was that 1997 acquisition of Bondnet that first drew Goldstein to his now-current employer. He was impressed with the professionalism and meticulousness that BNY’s executives showed when orchestrating the deal. Goldstein hadn’t ever been exposed to that level of deal-making and, he says, he resolved there and then­ that he wanted to learn how to do that.

Goldstein moved from Greenwich, Conn., where Bondnet was headquartered, to New York City, and soon took the role of head of technology, risk management and enterprise architecture at BNY. After the merger with Mellon in 2007, he was asked to take responsibility for the new firm’s asset management technology globally. And then two years ago, in addition to his asset management role, Goldstein took the reins as international CIO and now oversees the Europe, Middle East and Africa (EMEA), Latin America and Asia-Pacific regions.

As part of his international responsibilities, Goldstein was shipped over to London. Because he is on the road so much—the native of Buffalo, NY, travels internationally about twice a month—he has kept a house in New York.

On this frigid mid-December Monday afternoon we are sitting in the firm’s Midtown Manhattan offices in the MetLife building, which towers above Grand Central Terminal. He flew into New York on Saturday and will get on a plane to Pittsburgh the day after our interview to meet with clients, and then return to London on Wednesday.

Despite the arduous travel requirements of his position, Goldstein says he enjoys what he does because of how comfortable he is with the company’s culture. The reason he hasn’t actively looked to move to another firm is the same reason why he didn’t jump ship back in 1997—he wants to learn more from them.

He admires that BNY’s senior management and its technology staff have decades of experience, and as such, have seen several waves of technological sea changes. Most importantly, they have a maturity, he says, about getting the job done, and getting it done with very little politicking involved.

“There was, and is, a higher proportion of people focused solely on the work and not on what’s going on in the office or who’s doing what and where,” he says. “Having worked at other Wall Street firms, where there’s a lot more attention paid to those things, I found this to be quite sensible.”

Similar, Yet Different
While every CIO has to deal with concerns over outages, latency and changing regulations, asset management has a subtly different character to that of investment banking. BNY Mellon Asset Management, which manages about $1 trillion, is one of the largest managers in the world. Those assets are split among 20 different boutiques. Goldstein says the idea of a multi-boutique business model is predicated on maintaining the individuality and cultures of the different companies making up BNY Mellon Asset Management; the firm, as a whole, can deliver different results in various market conditions, since there isn’t one homogenous business structure, he says.

As a result, BNY Mellon Asset Management uses technology that is well supported by vendor packages, which the firm integrates and customizes to fit the needs of each boutique. “Supporting our numerous distinct asset management boutiques has specific technology challenges,” Goldstein says. “The scale of different individual asset management firms, from a technology perspective, is quite different from our very large processing systems that, because of their size, have unique needs. Most of our asset management solutions tend to be less challenged on scalability, but have greater requirements from a qualitative/quantitative standpoint for things like performance, information needs, reporting, and responsiveness to customers, and so on.”

Technology at BNY is seen as a key pillar of its business model, Goldstein says, but it is used as an aide and not as the core of the business, unlike, for example, a buy-side shop that centers on a high-frequency-trading strategy.

To illustrate this point, Goldstein tells the story of one asset management company that BNY Mellon acquired that had almost no technology. It was an extraordinarily successful firm, he says, but it managed its investment and accounting processes on 3-by-5 index cards. But because its standards were so demanding and its accounting so rigorous, the firm succeeded.

Since joining the BNY Mellon Asset Management family, the boutique has automated much of its procedures and has been able to scale out—but the point is that the success of an asset manager is related to the insight around its investments, its investment processes and around properly challenging assumptions and having a point of view. These qualities are not technology-specific, Goldstein says.

Improving Technology
But that is not to say that there aren’t vastly complex IT challenges that need to be addressed at the firm. One of the largest projects that Goldstein is in the midst of delivering is creating a strategic data warehouse that can quickly pull together all of the firm’s investment information. In order to address risk concerns, changing regulations and added compliance reporting, BNY Mellon Asset Management is continually working to improve its data quality to ensure that it can access that data quickly and easily. Due to the firm’s multi-boutique model, there is a lot of data that needs to be aggregated so this is a constantly expanding project.

The firm has also identified areas in technology where it can create scalable, leverage-able centers of excellence, or COEs, that can be used to expand its investment management companies in areas such as trading, compliance, accounting, billing and customer-relationship management. Additionally, it has also been active in tapping into new collaboration technologies, such as Apple’s iPad and an internal Facebook-like solution. BNY Mellon Asset Management recently completed a rollout of iPads to sales and marketing reps at Dreyfus, one of the firm’s 20 boutiques, comprising a family of retail and institutional mutual funds and separately managed accounts. The result is fewer papers that have to be carried around to business meetings and the ability to create a more efficient presentation. Also, the information therein will be available in near-real time. The firm is also piloting the iPad for functions such as email and corporate access.

“The challenges around this new space where people want to do much more on their Android or iPad or whatever, is providing a secure environment to access company information, or to store it in a secure way so that the information isn’t compromised in the event that the device is lost,” Goldstein says. “Figuring out how to do that with the latest generation of devices that aren’t as mature from a corporate standpoint is the real challenge.”

For the international portion of Goldstein’s role, he says the firm is continually looking to grow its presence in emerging markets. BNY Mellon now has 5,600 employees in India, it recently received a license for a joint venture with a Chinese asset management firm in Shanghai, and has expanded its licenses in South Korea. Goldstein says that his company is always on the lookout for partnerships or joint ventures to expand its presence.

The Confidence Game
It’s no secret that the regulatory landscape is constantly evolving and much of the intent behind these regulations is to manage risk within the system and to ensure transparency and good governance.

Goldstein says that while working in an evolving regulatory environment has its challenges, ultimately it is for the best because the greatest issue facing the asset management industry is investor confidence—or the lack thereof. He says the qualities of stability and reliability have become more prominent since the credit crisis, and that is a valuable endeavor for the system to go through as a whole.

“There is opportunity in change and there are a lot of changes going on right now,” he says. “We know that there will be new requirements for us from a technology standpoint as a result of the changing regulatory environment. But the opportunity for the investment community is to demonstrate the value of the investment process, to show consistent results, and to instill trust.”

An Early Lesson
Consistency, trust, reliability, steadiness and accountability—these are qualities that make for both a good technologist and a paramedic. Early in Goldstein’s financial services career he had to illustrate his ability to perform under fire. When he had just started out in the business he was a DB2 database administrator working for a large, multi-national company on its tax application during tax season. He was doing some routine maintenance that called for him to back up the database before dropping it. “I sort of missed that step,” he recalls. He dropped the database and then recreated it, causing overwrites of a lot of core information. He spent the next 72 hours working with vendors and the company’s support staff to reconstruct the database—and he did it successfully.

At the end of the ordeal his manager at the time said he expected him to just take off and leave, since he was such a neophyte. But he stayed and pushed through and saw the reconstruction to completion. He learned two things in the process: Always have an intense focus on operational rigor and following procedure, and establish processes that are repeatable, reliable and that give you operational assurance.

ALAN GOLDSTEIN FUNDAMENTAL DATA

Not just a CIO at Bank of New York Mellon Asset Management: Goldstein has been on Swift’s board of directors since 2006. He is currently the chairman of the Audit and Finance Committee for the industry messaging cooperative.

A sleepless night: When Goldstein arrived back in the US on the Saturday before our interview, all he was looking for was a quiet night’s sleep in his New York home. But while he was in Europe some work had been done on his home’s alarm system. As a result, the alarm went off four times in the night. The joys of travel. ...

What else keeps him awake at night: “What I don’t know.” As any technologist can attest to, it’s easy to be kept awake by that constant, nagging worry: “What didn’t I account for?”

Favorite part of the job: His team, first and foremost. And also a simple love of technology.

Thoughts on the cloud: Goldstein says his firm continues to look at “clouding” solutions for things like standardizing hardware and software stacks, but it does not play a big part in asset management’s production deployment business. He also says that there are still challenges facing the technology from a vendor-licensing standpoint, and more specifically, the financial models on the software-licensing side.

As a result of the market not being very mature, “that creates some financial uncertainty around how this will play out long-term,” he says.

“For example, I remember when we first started using virtual CPUs, the discussion at the time was that vendors wanted to charge licensing fees based on the number of virtual CPUs instead of physical CPUs. These were difficult negotiations because the value we could extract from a virtual CPU was significantly less than a physical CPU.”