State Street Corporation Barclays 24th Annual Global Financial Services Conference

Yeah, thanks, Jason. Really great to be here. Just one year into the job, just an incredible platform that we can talk about that we laid out our medium-term outlook in July. I think I'd start off with the global franchises that are part of State Street and drive State Street at scale. So whether it's the number 2 custodian in the world, number 4 asset manager in the world, number one FX provider to asset managers in the world as well out of our markets business. So pretty incredible collection there that really drives it. It all starts with that at the foundation and the core. I think the second one that I would highlight is some very distinctive strategic initiatives that we think will diversify and accelerate growth and returns over time.

We talked about our presence in the alternatives business, what we've got going for us, in terms of investing in digital and infrastructure and products, and then more recently, a lot of investment being put into the wealth services space. So that's the second one that comes to mind, just really strong strategic portfolio on top of the core. We did talk about transformation, which I think is something that allows us to invest in those strategic initiatives while still maintaining margins. I guess I'd hasten to also add, recent performance has been really strong. After basically new leadership over the past 2, 3, 4 years in each of our biggest businesses, you're just seeing some of that momentum really kicking in terms of the investments that they've made.

There were records set in the second quarter across all of our businesses, in one way or another. That momentum has been really good. If you just take a little step back, just a few years ago, our pre-tax margin was in the mid-20s. When you look at where we are now, it's basically low 30s. Just significant progress in a short period of time. I think you put all that together, and I'm feeling very good about our ability to deliver on those medium-term goals that we laid out in July. So yeah, those are the top ones that come to mind.

Yeah. Maybe I'll do that in reverse order. I think because in the near term, I would say alternatives is the one that really is delivering. So you've got 15%-20% of our servicing fee revenues actually coming out of the alternatives business. And we're really investing to make that a platform business, and improving capabilities along the way. So, things like leading into a product where we would drive daily NAVs, as an example, in the alternative space, which is pretty typical in a traditional world, but not quite as typical in alternatives. So we're continuing to invest there. We've had a lot of success. The growth profile's attractive, the return profile's attractive. And so I'd say over the near term, that's the one that really contributes. The next one, if you think about digital products and infrastructure.

From an infrastructure standpoint, we launched our digital asset platform earlier this year, and we're continuing to invest there from an infrastructure standpoint where we're heading into a multi-chain capability in digital. So by the end of the year, we'll be in a public permissioned space from a blockchain standpoint, and we'll have public permissionless to follow. But we'll be in a multi-chain infrastructure. And we sit at the center of our clients' workflows, managing that kind of on-ramp, off-ramp between the traditional world and the digital world. I think where you're going to see that contribute is really just being relevant to our asset manager clients around the world, and continuing to see organic growth by making sure we can play that role over time. The last one that you mentioned, wealth, is the one that is really starting to gain momentum and gain steam.

It's not a huge driver of profitability today, like alternatives is, but I'd say over the medium term, you can really keep an eye on wealth being a needle mover. We started off with our Apex investment late last year, and that was driving back-office capabilities. We've recently announced a State Street integrated offering here in the U.S., and we've got a mandate from one of the largest RIAs in the U.S. to be an anchor client, and our front-to-back wealth services offering. We're extremely excited about that. We've got a pipeline building behind that as well. When you think about broadly the things that really drive that strategic initiatives portfolio is probably alternatives in the near term, digital throughout, and wealth picking up steam over the medium term.

Yeah. The way I think about that is you think about our top three businesses, and I look at it as the intersection between those businesses and our top client segments. You've got investment services, investment management and markets, and then you think about the client segments that we want to serve. It's asset managers, traditional and alternative asset owners, and wealth managers and intermediaries. When you think about asset managers, that's our kind of collaboration primarily between investment services and markets. So where you see investment services with the front-to-back capabilities serving asset managers, but institutional-grade markets capabilities from a liquidity and financing perspective, that where we go to market together. Investment management provides distribution capabilities as well as supporting fund launches for other asset managers.

That's kind of an exciting way to think about on a day-to-day basis, how we serve the asset manager client base. When I flip over to asset owners, same capabilities port over from investment services and investment management. But you think about from a One State Street standpoint, where a bigger part of the story is the investment management capabilities, where whether it's ETFs, portfolio construction, you basically have indexing, multi-strategy, outsourced CIO. A very rich portfolio of products that the investment management business provides to asset owners. But nevertheless, we also can bring, again, institutional-grade markets capabilities for liquidity and financing to the table at the same time. So on a day-to-day basis, you see that playing out with asset managers and asset owners. I think the third one, and I alluded to this a little earlier, the third one being wealth managers and intermediaries.

I would look at that as not only a customer segment, but also, as I mentioned, one of our top initiatives. It is probably one of the clearest examples of One State Street, really, and certainly one of the more recent, more exciting ones, where each of the businesses has a big role to play. Investment services, as I mentioned, we have launched a front-to-back capability with CRD Wealth supporting the front office. We have the State Street capabilities in the back office where we have that resident within State Street proper, but also supported by Apex. So very exciting in terms of that investment services approach.