BNY Mellon Q2 2026 Shows AI and Digital Assets Driving Growth and Coexistence

How AI and digital-asset investments flow to bottom-line impact, and what risks exist for custody from on-chain migration/tokenization (BNY)

1) AI: how it is expected to translate into bottom-line impact and growth

A. Bottom-line channel: positive operating leverage (capacity + expense discipline)

Management frames AI primarily as a capacity creator that can improve operating leverage rather than a pure cost-cutting story. They describe taking previously “people intensive” processes and making them “significantly more automated,” creating capacity, and then deciding whether that capacity goes to serving clients, improving products/experience, or producing expense efficiencies—with the overarching “north star” being increasing positive operating leverage. ¹²

B. Growth channel: better client outcomes and product differentiation

BNY states that AI is already creating value in three dimensions:

1. Run the company better: embedding new capabilities into end-to-end workflows and enabling productivity, creating capacity. ³
2. Build better products and deliver better experiences for clients. ³
3. Expand the perimeter: bring new capabilities to market through platforms, data, and expertise. ³

Separately, they note AI is producing “tangible, and measurable impact across the entire client life cycle,” and that as capabilities evolve, AI can become a “source of differentiation and long term value creation.” ⁴

C. Evidence of operational embedment (inputs that management says feed bottom-line impact)

BNY points to breadth and depth of AI adoption across engineering and workflows:

• They describe a journey spanning since “3.5 years ago when ChatGPT was first launched,” with “Eliza copilot” being used broadly. ⁵
• They cite an engineering statistic: “roughly 40% of the software written is now written using AI.” ⁵
• They also note practical indicators of productivity/organization: headcount is “down 7% over the year,” while revenue is up (in the Q&A framing), and they characterize headcount as an output rather than a target. ⁵⁶

Even though BNY says they “do not break out the very specific economic numbers” for AI, they argue the rigor of measurement is consistent with their overall operating approach and that adoption/embedding is the differentiator. ⁷

D. Net translation: revenue growth supported by platform/commercial model + lower unit cost opportunities

BNY emphasizes that AI is integrated with its operating model and “commercial model,” and it links reduced manual work to freeing bandwidth for “serving clients in new and innovative ways.” ¹ This aligns with their view that AI benefits show up as a combination of:

• productivity/capacity (expense and throughput),
• client-facing improvements (wins and higher-value services),
• and new capabilities (expanding service perimeter). ¹³

2) Digital assets: how investments translate into bottom-line impact and growth opportunities

A. Strategic framing: “always on operating model” and transition coexistence

BNY argues that digital assets are one tool to support the broader transformation of financial market infrastructure toward an always-on operating model. ⁸ They explicitly expect a transition rather than immediate replacement, describing a long coexistence period where new capabilities run alongside traditional capabilities. ⁸

In that coexistence context, they position BNY as a “bridge” between old and new—helping clients manage transitions across “payments, moving, storing, managing.” ⁸

B. Custody and infrastructure as the growth engine: connectivity + institutional-grade governance

BNY repeatedly ties digital assets to infrastructure services that improve efficiency and expand optionality “through trust and resiliency.” ³ A concrete example they give in Q2:

• Expanded relationship with Circle to bring together institutional digital asset custody with mint-and-burn capabilities for USDC within a single operating model. ⁹
• They say this builds on their role as a custodian of USDC reserves and enables clients to move more seamlessly between traditional cash and blockchain networks using infrastructure with “institutional grade governance, operational resilience, and scale.” ⁹
• They also describe this as expected to be a “recurring theme” as they invest in infrastructure supporting the future of financial markets. ⁹

C. Revenue implication logic: maintain relevance during coexistence and capture share as activity grows

BNY’s logic is that disintermediation risk falls away if the firm invests/participates: “The way 1 gets disintermediated is when you do not invest, when you do not participate in the new thing.” ⁸ In other words, their bottom-line view is to avoid being displaced by on-chain rails by being present in the rails and providing the “bridge” services clients need during transition. ⁸

Separately, they cite specific revenue contribution from digital-asset-adjacent platform expansion in the broader innovation narrative (even when not exclusively digital assets): they highlight that certain newer products became “compelling contributors to revenue today,” such as Collateral 1, Borrow+, and buy side trading solutions. ⁹ (These are examples of their platform innovation approach more than a quantified digital-asset line item in the excerpt.) ⁹

3) Key risks to custody from on-chain migration and tokenization—and why BNY argues these may be manageable

A. The core risk: custody economics could be disrupted if assets move “on-chain” and functional services tokenize

The question itself frames the custody risk: “risks to the custody business model” from “on chain migration and tokenization,” and asks whether it is truly a risk to revenue streams. ¹⁰

B. BNY’s risk stance: digital assets are framed as enabling coexistence, not immediate replacement

BNY acknowledges evolution toward always-on infrastructure but stresses:

• transition “will take a while,” and
• they expect “coexistence” between new and traditional capabilities. ⁸

This implies the custody business model is exposed to change but not assumed to be eliminated instantly—at least in BNY’s stated framework. ⁸

C. BNY’s countermeasure: be the “bridge” and provide integrated custody + operational resilience + governance

BNY describes positioning as the bridge “between the old and the new,” supporting clients globally across “moving, storing, managing,” and helping both new “economy participants” and traditional clients as they evolve. ⁸ Their Circle/USDC example illustrates their approach: combining custody with mint/burn infrastructure in a single operating model to enable seamless movement between traditional and blockchain ecosystems. ⁹

D. Bottom-line implication: custody value may shift from pure “holding” toward integrated infrastructure

BNY’s stated objective is to connect traditional and digital ecosystems to “improve efficiency, expand optionality, and support growth through trust and resiliency.” ³ That suggests custody economics may evolve toward broader infrastructure and governance services, not necessarily collapse. ³⁸

E. Their “discipline” message: participation is necessary to protect economics

BNY’s most direct statement about disintermediation is that the way a business gets disintermediated is “when you do not invest, when you do not participate in the new thing.” ⁸ Taken at face value, their view is that custody risks are real if the incumbent stands aside, but mitigated if it competes within the tokenization/on-chain environment. ⁸

4) Putting it together: growth opportunities and risk summary

Where AI can drive growth and bottom-line improvement (per BNY’s framing)

• Operating leverage via capacity creation from automation and workflow embedding, with the explicit “north star” being positive operating leverage. ¹²
• Client lifecycle impact: tangible, measurable client lifecycle outcomes and differentiation over time. ⁴³
• Product and perimeter expansion: better products/experiences and new capabilities brought to market through platforms/data/expertise. ³

Where digital assets can drive growth (per BNY’s framing)

• Always-on infrastructure transition: positioned as the bridge during a long coexistence period between traditional and digital capabilities. ⁸
• Integrated custody/infrastructure offerings: example—Circle/USDC arrangement combining custody with mint/burn in an institutional operating model. ⁹
• Trust and resiliency as the value proposition tied to efficiency and optionality across ecosystems. ³

Risks to custody from on-chain migration/tokenization—and BNY’s mitigation logic

• Risk: on-chain migration and tokenization could disrupt traditional custody economics if clients migrate to alternatives. ¹⁰
• Mitigation per BNY: expect coexistence (not total replacement), and maintain relevance by investing/participating as a “bridge” providing governance, resilience, and integrated infrastructure (including mint/burn connectivity). ⁸⁹

Bottom line (analytical conclusion)

BNY’s excerpts support a view that AI is monetized through operating leverage and client/product differentiation, with early-stage but “tangible” client lifecycle impact and broad AI embedment signals (including AI-assisted software writing). ¹³⁵⁴ Separately, digital assets are positioned as a tool within a broader transition to always-on financial infrastructure, where BNY expects coexistence and intends to defend/extend custody economics by acting as an integrated bridge (e.g., institutional custody plus USDC mint/burn connectivity). ⁸⁹ The principal custody risk from on-chain migration/tokenization is acknowledged conceptually, but BNY’s mitigation thesis is that disintermediation is less likely when the firm invests and participates—while the transition is gradual and custody value may shift toward governance and infrastructure rather than simple asset holding. ¹⁰⁸³