00:00So tell us, why Australia? What are you doing here?
00:02We've been here for over 50 years. I mean, you mentioned the future funds, superannuation funds continuing to accumulate at
00:11a really fast clip.
00:13If you add the 12 percent that is mandatory, plus the 8 to 12 percent in returns on average every
00:22year, the 4.4 trillion Aussie dollar will be something like five and a half trillion equivalent U.S. dollars
00:32within the next seven years or so.
00:35It'll continue to grow from there. It's an important market.
00:39It will become the second largest pensions market in the world, surpassing the U.K. and Canada over the next
00:46five to 10 years.
00:48And there's a lot of innovation that happens here.
00:50And we're interested in both the innovation opportunity with the supers as they continue to push the envelope on developing
00:58their operating models and their investment platforms.
01:02Yeah, it's interesting you talk about pushing the envelope because I think increasingly with that enormous capital pile, the question
01:09has been how to most effectively put it to work.
01:12Yeah, no. So and you're right, because they're already larger than Australia's market cap and GDP.
01:20So they are looking overseas increasingly. And a lot of the themes that are coming out from our conversations are
01:26they're internalizing some of their investment management.
01:29How are they driving risk management frameworks to accommodate a new way of, you know, running their business and operating
01:39models and also their liquidity platforms, their resiliency, operational and cyber and technology resiliency.
01:46So there's there's really a lot that that we're talking to the supers about.
01:50And it really is a lot about the risk frameworks that they run.
01:54In what ways do you find B&Y able to support that investment cycle?
01:59So it's both in the pre-trade and the post-trade investment flows.
02:05You know, 80 percent of what we do is in the post-trade world.
02:07We do a lot in the pre-trade as well.
02:09So we we manage, including for some of the largest sovereign sovereign funds and supers here, investments for them globally.
02:20But in the post-trade world, we run 50 trillion dollars worth of data and analytics on behalf of funds
02:28all around the world, including here in Australia.
02:30So giving the supers the ability to view holistically their investment portfolios, whether it's internally or externally managed total portfolio
02:42view, which is a trend that the supers have been trying to achieve, moving towards total portfolio recognition and the
02:49ability to drill down and understand granular at a granular level where their exposures are.
02:55Answer simple questions that are very difficult in practice, like, for example, what is my exposure to NVIDIA?
03:01What is my exposure to the euro?
03:04What is my exposure to IBM?
03:07And so on and so forth.
03:09I'm glad you brought up exposure to AI because it's sort of an existential question at the moment.
03:14And one point of view that I find quite fascinating is the one that it says that AI can be
03:20transformative.
03:21It is no doubt going to be transformative.
03:23It may be productive, but it may not be profitable for an investor.
03:27Is that something that sort of comes up in the thesis of how you approach the broader investing into AI?
03:33I mean, our thesis on AI started very early and we've been investing significantly, training all of our employees.
03:40100 percent of our employees are on Eliza, which is our multi-agentic model agnostic platform.
03:4860 percent of them are building agents.
03:5060 percent of them are using AI daily.
03:53And it really was about not encouraging token use, but encouraging outcomes to make work more efficient.
04:01So to your point, Heidi, the main use case today is around operational efficiency.
04:11And in getting more operationally efficient, removing friction in market trades and in settlements and in giving clients better answers
04:21faster,
04:21it makes the entire industry more efficient when you process $63 trillion worth of assets under custody and administration.
04:29The opportunity going forward is in driving better, faster insights in order to help clients make better informed investment decisions
04:39faster than they would have previously.
04:41Marry that with digital assets, by the way, and then you can have your exposure to whatever it is that
04:47you need to get exposure to in the market much faster than you would have previously
04:51and with much higher level of certainty of that exposure hitting your account when you need it.
04:55Do you worry about some of the security issues that we've seen make headlines?
04:59Yes, absolutely.
05:00We get paid to worry about cybersecurity and operational resilience.
05:07If you look at our top risks, which go to the board on a quarterly basis, cybersecurity and operational resilience
05:14is always in the top one, two or three.
05:17And therefore, a lot of our capital plan and budget goes on investing in making sure that we're using AI
05:27to defend against those who are using AI to attack.
05:32And we do that at scale.
05:36You look after the Middle East as well.
05:38What's been the impact from the U.S.-Iran war?
05:41Have you made strategic staffing opportunistic decisions based on what's going on?
05:47Yeah, so we take a long-term view to any market that we're in.
05:51We've been here in Australia for 50 years.
05:53We've been in the Middle East for over 50 years.
05:57And we're continuing to grow.
05:59So we're continuing to put people, resource, new capabilities into the region.
06:06I think that the big shift that we'll see in the region, and it does all depend on what is
06:11that long-term solution to the conflict that we're living through.
06:16But a likely outcome, maybe base case, if I can say, is that some of the net foreign assets that
06:25come out of the region could be coming back into the region, recycled back into the region by the big
06:31sovereign investors to invest in infrastructure, resiliency infrastructure.
06:35Think food security, defense, transportation, energy infrastructure, data center, security, and so on.
06:43There's going to be, if that happens, there's going to be a lot of infrastructure investment and spend in the
06:48region.
06:48And we are just as well placed at helping clients invest in their regions as we are investing abroad.
06:55Does the lack of certainty in terms of what's going to happen make it difficult for you to make investing
07:00decisions?
07:01I think you always take your base case, best case, worst case, and you attach your probabilities to them.
07:08We have a pretty good, strong conviction on the region long term, and we continue to invest.
07:14We have a pretty good, strong conviction on the region long term, and we continue to invest.
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