BNY Mellon streamlines the hunt for liquidity with LiquidityDirect updates

For a bank that’s over 200 years old, solving current problems is the key to longevity, and innovation is vital for BNY Mellon. For the last three years, adaption and innovation have been at the heart of the work being done in investment solutions and on the LiquidityDirect platform.

Initially established in 1997, the liquidity services platform targeted money markets and cash deposits. Sam Jacob, head of global liquidity products and strategy at BNY Mellon, says that over the last three years, the bank has committed to creating a holistic offering for short-term investments. Today, the platform has seen $50 trillion in transactions and about $1.3 trillion in cash investments and deposits.

“Our overall view around this is that we’ve pivoted from being a monoline offering to a more holistic short-end solution for the institutional client base,” Jacob tells WatersTechnology.

At its core, LiquidityDirect provides BNY clients with an enhanced workflow where cash and custody sit under one umbrella alongside trading capabilities and analytics. “You don’t have to reposition cash; you don’t have to worry about settlement on the flip side of the underlying asset,” he says.

Jacob says vertical integration and work on the back end allowed the bank to open its infrastructure to multiple providers for various components of the platform to create a seamless workflow. Therefore, all a client needs to do is log on and transact. The system does the rest.

While working to enhance the platform, Jacob spoke with clients to understand their needs and pain points. “It was pretty clear and in plain sight that one size does not fit all,” he says. As the world grappled with the pandemic, needs were changing. Clients were looking to different asset classes for managing debits, credits, and liquidity. This is reflected on the LiquidityDirect landing page, which allows users to click a single button for different asset classes, including money market funds and cleared repo.

Underpinning all of this, of course, is data. Outside of the traditional workflow of the platform, various dashboards allow clients to access key information related to the various asset classes. From the landing page, a user can click “gain insights” and pull up what BNY refers to as an aggregator. Jacob describes it as a dashboard that lets a user research information on various money market funds, for example. A user can toggle through issues and issuers, and then can filter by maturity or specific currency. The platform also looks to solve data problems for the focused investing world. Using MSCI data on the platform, questions like, “What is the impact of my investment?” and, “How do I add investments that align with my values?” can be answered with MSCI ESG datasets.

There is also information on the platform around portfolio exposure in different countries. A user can then click on each exposure for a breakdown of the underlying issues in each country. In the case of short-term liquidity, for example, a debt ceiling event may trigger a user to determine they no longer want exposure to a certain region or issuer. Fast, accessible information, Jacob says, helps users choose their funds and start investing.

Once those insights are collected and a fund has been selected, a user can then transition to the “do work” tab. They can buy and sell, review information around cash flow and how much is going in and out, and make edits to trades before they are submitted.

“We don’t want to show you how complex [the platform’s design] is on the back end,” Jacob says. “You tell me the dollar amount; we know which account and then we do all the processing on the back end.”

All liquidity-related needs can be managed with a few clicks. “The enhancements are all around the automation on the back end, the simplicity on the front end and merging the data across various sources,” he says. Previously, once a trade was made, an investor would have to call their broker, call their cash bank to ask them to move their cash to the custodian bank and settle. “In our world, all you do is click ‘submit’ and we take care of all three of those steps.”

Jacob says the bank leveraged distributed architecture and cloud-based technology components. Visualizations are delivered using a combination of off-the-shelf and proprietary capabilities.

As for what comes next for LiquidityDirect, Jacob says the bank is having conversations around leveraging chat, GPT functions, artificial intelligence, and machine learning. This week, BNY also announced that it would be launching its LiquidityDirect White Labeling service offering, providing financial institutions a liquidity management solution for their end clients. Morgan Stanley Investment Management will be the first institutional investor to utilize the offering.