Betting on Fintech: State Street’s Greg Fortuna on Innovation

Brett Turner (00:15)

So here, another episode of Fintech Corner. We have a special guest. All our guests are special, but this one’s extra special. And we got a lot of things to talk about. So we’ll open it up. I am guest host, Brett Turner, founder and CEO of Trovata, our guest today, Greg Fortuna with State Street, who runs all the GlobalLink products. So maybe just a quick intro first, and then maybe we’ll just kind of jump into some topics.

Greg Fortuna (00:41)

So Greg Fortuna, I run GlobalLink, which is our collection of electronic execution, clearing, analytics platforms at State Street. We specialize in cash products, FX, ETFs, fixed income clearing, so multi-asset class solution used by institutional investors.

Brett Turner (01:02)

Well, if you think of, well, first off, mean, it’s public, it’s out there. We welcomed you guys as part of our investment team. So we’re excited about that.

Greg Fortuna (01:11)

Yeah, yeah, I mean, it’s exciting for us. You know, I think the companies align well, I think what you guys are doing in the space is very complementary to what we do in the space. So it’s a nice, you know, complementary arrangement. I think you guys have an amazing ability to grow going forward given how you’re attacking the market. So I think we’re very excited about the partnership and then about what we can do together within that partnership.

Brett Turner (01:40)

Awesome. Yeah, us too. think just that having that the alignment we’ve already had we’ve been partnering for a while to kind of make that sort of vested interest now and also just you know that much more support to see how we can innovate together and kind of take the partnership to the next level is going to be exciting. Yeah, so we got I mean, pick your poison lots of hot topics right now. You’ve got maybe just digging in a little bit on AI. You know, that’s if you kind of think of now ChatGPT that wave two and a half years ago when that really hit and got momentum, you know, people dipping their toe in the water, what this even means for corporates, for corporate governance and security and kind of a lot of like hands off, don’t touch this. Starting to get more acceptance and all of a sudden now you have, you know, you look at the application or through more AI agents that people are talking about. Now you have within, you know, even corporate treasury talking about like, hey, we could actually use this. We know we have lean teams. Like, let’s put this to work. How can we solve a lot of these problems? 

So maybe a little bit about like, from your perspective, from clients or even within the bank, like how has that just that momentum of AI and what that can mean to lots of different things? How has it really changed over the last six months, a year?

Greg Fortuna (02:57)

Yeah, you know, I think it’s been a bit of a journey. So it starts with data. And I think that was, you know, we talked a little bit last year about the data and automation. And I think that the foundational layer for AI is getting the data into a place where clients can actually put that AI layer on and then release the agents and do that aspect of it. And I think it went from sort of data to the large model learning, you know, a lot that aspect, which was like the precursor to AI. And now we’re in an exciting sort of time. We’re starting to see AI be deployed not only on the development phase, where you can actually use it to deploy releases and things like that, but we’re starting to see it in the front office with our clients. Clients are now utilizing it. And I think, and we chatted a little about this beforehand, I really see AI as a complementary piece to the human element versus a replacement of the human element. So we’re already doing some things in this space where we do, we have a TCA platform in our space, and so we call it decision augmentation, where we’re just helping our clients make better decisions, more informed decisions, and that’s how we’re doing it. I think that’ll be the first marriage. We’re seeing it in places like QA and UAT, the four I principle checks and six I principle checks of days gone by, of the way that maybe I initiate a payment and you have to then approve it. That’s where we see an application for AI being that second layer to recheck the work and make sure that everything’s good and have it go out the door. So it’s exciting. We’re seeing it a lot. I think the adoption rate’s gonna continue to just skyrocket over the next couple of years.

Brett Turner (04:37)

Are you feeling like demand is kind of starting to pick up from people asking about it? Like there’s real…

Greg Fortuna (04:41)

I think demand’s been there. I think acceptance is picking up. Like that’s the difference. You know, get all the buzz and all the talk, but nobody really does it. And then once you start seeing people do it, and I think, you know, some of the big players that provide the AI agents, the Microsofts, the Googles, that’s helped with the acceptance, because those are already approved in a lot of the shops that we do business with and a lot of the treasury centers. So it’s easier to deploy. Whereas maybe a couple of years ago, it was smaller places that weren’t through procurement, weren’t in these places. So it was harder to deploy.

Now it’s a little bit easier for people to get comfortable with it and deploy.

Brett Turner (05:16)

Well, if you think now and just the technology landscape, I mean you look at all the GlobalLink products and I mean you had the start of some key products in that, and those journeys like developing those. So you’ve kind of covered the the gamut there But so you can understand how it can have that effect on the product journey. But if you look at, more broadly in the industry, I mean, there’s a lot of you know legacy tools out there, some tools that you’re on here we’re at AFP on the show floor that it’s like that’s been around for 40 years or something like that. So if you kind of look at even adopting it and if companies maybe have a legacy system that might not be easy to adopt that and yet the demand is there and acceptance is there and starting to happen…how do you think that starts to kind of collide or how are you maybe foreseeing that the adoption of like it’s almost like the haves and have nots? What can adopt or who can adopt it, what technology can adopt it, what can’t, maybe how’s that? Thoughts on how you see that playing out?

Greg Fortuna (06:20)

I think you guys are a great example of it, right? So you guys saw an opportunity when you first came in, you saw an area in the market where there needed to be more automation. There needed to be more intelligence and more data, you know, collection. And you filled that void. And I think that’s what you’re going to see with some of these legacy platforms. There’s still a ton of manual work, a ton of manual setups. A ton of people are doing things on older tech where there’s a hundred different deployments to a hundred different clients and that support structure and all of that. I think that’s right for someone to come in with a more modern platform that they can come in over the top with an AI layer, help with deployment, help with integration, and just roll things out much quicker. And all of it is going to lead to getting data faster and more reliably. That’s the key, right? And we can all get every system out there, however it could be 40 years old, it can get data at end of day. They all can do it. But if I need data now, I need to make a decision now, and I have a cutoff coming up, and I want to know my investable positions, those are the ones that going to be the systems of the future. Can I get that information quickly? And that’s where the data and the AI and all of that’s going to really kick in, I think. It’s speed and it’s intelligence just doesn’t exist in a lot of these legacy platforms.

Brett Turner (07:34)

You also think in, you know, a lot of the customers you have are really big companies. And if you think of the complexity of these companies across departments, I think maybe some of the legacy systems that might, you know, we’re kind of in the final innings of cloud. Maybe that tends to be more, whether it’s insurance or finance or some of these classic industries, but maybe other areas have already kind of gone through a tech wave and gone through a lot of, you know, modernization. So with that data across the company and this whole data readiness story with companies, if they don’t have their data together in a lot of ways, and you try to use AI, like, you…

Do you hear this from some of your clients? It’s just like, you might want to use AI, but if your data sucks, how’s that going to work?

Greg Fortuna (08:26)

It has to be the foundational layer. It has to be a journey to get it into a data lake house or some format or some function or use a third party to pull that together. People think sometimes the larger clients are going to be the more sophisticated. And in lot of cases, that’s true. But in a lot of cases, that’s not. Now you’ve got this large unwieldy shop that’s been around for a long time. It’s got dozens of different platforms, data scattered throughout that process, different controls, different levels.

And so that’s the difficulty. Sometimes we see the smaller guys, they’re much more sophisticated and nimble than the larger guys, because it’s easier. If you’re building a house now from scratch, it’s going to be a modern house. If you build a 1780 house and you try to modernize it, it’s going to be hard. It’s hard to get the wires through those old walls. And so I think that’s what you’re seeing in these data journeys.

Brett Turner (09:20)

A little bit of a level in the playing field a little bit with.

Greg Fortuna (09:22)

And there’s still a lot of work to be done, but I think that data layer, people have largely started the work on and finished the work on, which should set the stage for that next area.

Brett Turner (09:35)

Do you think when folks are starting to use ChatGPT a lot or others that are just, and being a lot more comfortable using it on various things within, that might not necessarily be your focus of what you do today to day, but it might be other related or ancillary kinds of things you might be using for. Do you think also if what you’re doing or AI can’t be rolled out and developed, and some of those technologies that we might see?

If you think of like the early, you know, 20 years ago, you used spreadsheets for all these workarounds. And you say, yeah, what is your workflow? Yeah, well, I use this system. And then I use this system. Well, like, what are you doing in between that? What’s like connecting that’s well, this spreadsheet, and then this spreadsheet. And you got all these workarounds. And like the really the system is like a collection of a few different spreadsheets.

Greg Fortuna (10:25)

It was all linear integration. You did step one, you output a file, you reformatted it, you uploaded it into step two, you did your work, you down and that was the way there was…

Brett Turner (10:36)

No points of failure there.

Greg Fortuna (10:39)

Correct. No efficiencies whatsoever. And there was no concept of like contextual sharing. Yeah, when I do this, these three systems need to know about it. Yeah, I need to make that available in real time. That didn’t exist, right? You couldn’t blast that you couldn’t put that out to the three systems simultaneously. You went in order. And the order was very prescriptive. And if you had to make any changes to that order, it was large regression tests and all of that. I think what you’re seeing now is the ability with the new technologies to do something in one part of the ecosystem and have that deployed and cast to multiple other parts simultaneously. And that’s where you can start to get complementary products. Your set of products, our set of products can work seamlessly together in real time versus the old days of let’s output a file and let’s put it over here and let’s…

Brett Turner (11:26)

Let’s that was the workaround. And so now you got all these tools kind of filling those gaps and it’s maybe a different kind of collection, which is better. But then now if you’re going to use AI and if it’s not being adopted differently or not being adopted at all in some ways in those chains, are some users actually going to return to, again, workarounds using AI and kind of back to this kind of fractured collection of systems in some ways?

Greg Fortuna (12:20)

I think that sometimes people over complicate simple tasks. And that can be a challenge. You think about the robots that they spend all this money to lift a thing and move it two feet when we can do it a lot easier. So I think it’s determining the right things to deploy the AI on. There are certain things that make perfect sense to deploy AI on. It’s not broadcast everything. You’re not trying to eliminate the treasury teams and eliminate the humans. You’re trying to augment them with better information, more informed decisions.

Brett Turner (12:49)

Get more leverage

Greg Fortuna (12:50)

Get more leverage more data faster. And so I think from that perspective, if the focus stays on the right things, then you will be able to deploy it in the right places, on the right, you know, aspects of the chain then I think it works, and I think there’s a much more openness to the build by partner than what there used to be 15 years ago. Everybody built in-house. And even though there’s a huge amount of sort of worry and concentration, rightfully so, on cyber and risk and all of that. I there’s much more trust to bring in third parties that have already built something that works and can be deployed seamlessly and efficiently on the process. And so I think you’re going to see that more and more. I think you’re to see more pieces be from different providers, but as long as they have to tie together seamlessly so you don’t end up with a hodgepodge of Frankenstein that something breaks and you don’t even know which vendor, you don’t know where it broke, you don’t know how. Because if you have automation without information, you got a black hole. And that is a problem. And so if you just automate everything and then something breaks, you’re gonna break. Is it in your data layer? Is it in your AI layer? Is it in your integration layer? Which vendor is it? So having that ability to track things throughout the process in real time. Again, marrying the human with the AI agent, et cetera. That’s going to be the key.

Brett Turner (14:13)

Yeah. So if you look at it now, so you think of there’s always been this balance of kind of optimizing yield. Liquidity comes first and then you optimize yield. But now if if if you can get a lot of cash flow intelligence a lot easier, now more agentic ways to kind of even drive much greater precision, even on top of what was already there. And then if you can get really precise and yet not add any risk. Now you could probably tighten things up. Is there– is that an opportunity? Do you kind of see that with State Street of how that’s, I mean, you would think that that’s benefits that are going to be coming your way for that…

Greg Fortuna (14:54)

It is. I mean, there’s, you know, everything’s got a flip side to it, you know, large bank. So there’s other aspects to it. But absolutely. People are trying to get, you know, more and more, again, more and more real-time. And I think part of that is that whole data layer coming into the real-time format eliminates a lot of that, that inefficiency. And it gives people the ability to optimize. If you don’t have the information, you can’t optimize and make the right decisions. So the more information that you can get, the more information that you can make, real decisions on the more that you can optimize your entire portfolio and not worry about overdrafts and not worry about, you know, breaks and other things that may that may occur. So from that perspective, you know, I think that’s the journey we’re on. We’re all on it. We’re trying to give clients the best options, and you’re seeing different options that have popped up. You know, we’ve got some of the newer stuff, the stablecoins and all of that. Those are coming into the market are even going to open up more possibility because now you’re not going to be within just the fiat time frame. You’re now talking about a 24-7 cycle. That opens up a whole different world.

Brett Turner (16:01)

So I was actually trying to, you said stablecoin before I did. No, we won’t get too deep on it, but I mean just maybe the high level observation set, one of the observations I made and actually is one of our other investors, our VC investors, was how, because he asked about stablecoins and I’m like, yeah, isn’t it odd that nobody seems to be talking about stablecoins. Is it kind of a taboo topic right now? Like you think across the board, or is everybody just kind of like bracing for, okay, what does it mean? And we still need to figure that out a little bit. But you think like with the Ripple acquisition of G-Treasury, with stablecoins coming, I’m sure right now, Money 2020 is happening. They’re probably talking a lot about it. I guarantee you there. But it is kind of eerily quiet a little bit from that. But maybe just maybe thoughts about this, what this might even mean to the space or to the business or what? 

Greg Fortuna (17:02)

We’ll bring it up a notch, right? The holy grail is 24-7 settlement. The ability to move things at any point globally in some modicum of either fiat currency or non-fiat currency, but something that holds value, that would be the holy grail, right? So that I can run a 24-7 book, hand it off seamlessly between locations. If I’m a global corporate asset manager, it doesn’t matter. I want the ability to be able to do that. That gives me infinite possibilities around collateral, gives me around payments, all of that takes a lot of the risk out of the equation. And so there’s various ways that people are looking at trying to get there. Stablecoins being one of those. And I think there’s others, you know, there’s tokenized funds, there’s tokenized assets, there’s a whole slew of it, it’s all there to sort of make it more seamless to move things back and forth. And I think that’s good for the market in general, right? I think it’ll disrupt some industries and some some players and I think the adoption rate will be different I think governments will get involved because it you know it also is gonna affect fiscal policy in a big way because the fiat Market is largely controlled by the governments and interest rates and all that and so there’s a lot of questions around what does this mean for that relationship? If you have something that’s maybe not as linked, you know directly, you know, how does that all play out? 

So I think everyone’s gonna walk a little bit slowly, but it’s going to be one of those where it’s going to be you’re walking along slowly and all of a sudden, boom, it’s going to pop. And so we’re all preparing for it in different ways and making sure that we’re including it in our future builds and what we do from a market perspective. So when it’s going to pop, when the adoption, I mean, who knows?

Brett Turner (18:50)

It’s gonna be fascinating. How it all kinda plays out. 

Greg Fortuna (18:53)

I was in the beginning of the money fund industry and people talked about it forever, but they all stayed in deposits, and they didn’t. And then all of sudden, within like a 24-month period, it was like boom, and it took off. So this feels very eerily similar to that, where everyone’s looking at it, everyone’s saying, this would be really great. This would add a lot of value.

Brett Turner (19:11)

That’s a good point because you don’t even think about that inflection point. Now it’s like it’s all just normal. But back then 

Greg Fortuna (19:18)

I set up my booth at the AFP by myself out of the back of my Subaru. Right? It was totally different. You were explaining a lot of times what a money fund was and what Rule 2A7 meant and why it was T0, and how you could use it. And now you don’t even think about that. It’s part of the fabric. You know, and I think you’ll see that and we’ll be sitting here five or seven years from now, and it’ll just be part of the fabric. Talk about it like it’s been here for 20 years. So just a question of when and how it gets there.

Brett Turner (19:48)

That’s great. Well, anything that like what are you’re most excited about anything? Probably a lot of things, but anything in particular that…

Greg Fortuna (19:55)

Partnerships like this and investments like this, excite us. We’re definitely open to doing more. We don’t believe that one player like a State Street is going to build everything from scratch anymore and do that. And so we are looking at best of breed across the industry. And there are a lot of exciting players out there. There are a lot of exciting things. And I think we can definitely have a one plus one equals three sort of situation. And we’ve seen that already in our relationship. And so that excites me because we’ve now built tech on our side to make it seamless so that we can work together with a client and make it very easy for them to adopt that and do that. That’s very different from what it was a few years ago. We had our tech and you had yours and maybe there was an old integration, maybe an API, maybe not, maybe file-based. That’s all gone. So that opens up a world of possibilities. I think that’s great. I think, look, people are much more open to this than they were a couple of years ago. And I think the technology that we’re bringing, the change is so quick that it’s just, you that’s probably the most exciting for me. You don’t have to wait two, three, or four years for adoption. It’s two months, six months a year. I mean, look how different we are from a year ago.

Brett Turner (21:06)

For sure.

It feels almost even kind of top-down. And it’s kind of how cloud came. My last startup was in cloud, and it was it initially was like nobody’s ever going to move, you know, critical workloads into AWS. It’s not enterprise-grade. And that all kind of just crumbled down. Everybody moves. Nobody’s managing their own data centers. You know, and I think it started to come to where it’s it’s going through the boardroom, the CFO, it’s kind of top down to the CIO, and saying if you don’t have a seven-year plan to start moving things, getting out of data centers into AWS or Azure or these hyperscalers now, then you’re kind of on hot seat. So I think in some ways too, some of this is coming down, AI in particular, they want the benefits of those. 

Greg Fortuna (21:54)

And you’re starting to see it rolled out in the bigger shops. You know, just on day-to-day, you scrape my inbox and tell me what I have this week. And that early adoption, those simple tasks that are being done, I think that gets everyone comfortable with, wait, this is really powerful. This just saved me, you know, two hours of going through my inbox because I’m at a conference and I can’t read the thousand emails. And I just think that’s the type of kind of eye-opening.

But that’s the eye-opening moments that people go, wait a minute, how can we deploy this on QA and UAT, and how do we deploy it in treasury? And I think you’re starting to see that in those use cases are popping up everywhere and it’s exciting.

Brett Turner (22:32)

Awesome. Well, hey, thanks for being on Fintech Corner. And yeah, appreciate the conversation. Really enjoyed it.

Greg Fortuna (22:35)

Absolutely.

Yeah, no, thank you.