Metrics Man: BNY Mellon CIO Suresh Kumar

He didn’t leave himself much time for sightseeing. Shortly after he arrived, he took a job with Royal Insurance, signed up for a master’s program in computer science, and started his own company, Continental Computer Corp., which built software for medical labs to process insurance payments. In 1986 he joined Pershing, then owned by brokerage DLJ, as a consultant, with the aim of getting two years of brokerage experience and then creating another startup. But Pershing drew him in through a series of intriguing assignments, turning two years into 26.

First was a trading system, which ate up the first two years. Then Pershing offered him full-time employee status if he would help construct an online brokerage system over the consumer electronic network Prodigy, based on France’s successful Minitel network. “We pioneered in many ways what you now see as online brokerage,” he says. “We were the first ones to connect online brokerage to NYSE directly without a Series 7 holder in between, approving each order. So we had to build an incredibly smart rules engine and automate a lot of the approval process. We also were the first to allow people to open accounts online and start trading up to $25,000 without money in the account.”

That last part scared a lot of people, who warned against allowing anonymous traders to conduct business from behind a keyboard. Kumar’s team built a fraud database to counteract those fears, and was the first to use Beacon credit scores, used today by credit reporting agency Equifax, to approve accounts online. “Our bad debt was next to nothing. So that turned out to be a better predictor of someone’s creditworthiness than driving a fancy car or belonging to a country club.”

Early Online Brokerage
Even in those pre-internet days of the late 1980s and early 1990s, electronic brokerage took off. More features were added. PC Financial Network, as it was known before becoming DLJdirect, expanded its rules engine from approving orders to approving accounts. It was the first to negotiate with regulators and market data vendors, which were not accustomed to a large number of retail consumers. In 1994, DLJdirect became the exclusive broker to AOL. Other networks popped up—CompuServ, Apple’s eWorld, Microsoft’s Marvel—and each time DLJdirect adapted its technology to serve them. When the internet rendered proprietary networks obsolete, Kumar shifted gears and launched a product for the web in 1996.

While building for AOL, he’d realized that a complete overhaul of the technology stack for each network was a no-go. A new architecture known as TAP, or Trading Application Protocol, was installed that allowed a smart phone, software, a proprietary network, or the internet to be connected without any further work on the back end. It meant a language-independent, operating system-independent, protocol-independent way of consuming DLJdirect’s services.

Kumar’s pioneering work in online brokerage remains his proudest accomplishment to date. Visitors to his office at Pershing Plaza will find a museum of old telephones from those proprietary networks he was scrambling to connect to, an anachronistic reminder of those crazy days.

That period demonstrated his affinity for bigger thinking and for stepping back and solving not just the problem in front of him. “There’s always a thought that if you do something tactically you get something faster to market,” says Lucille Mayer, then a colleague at Pershing and now Pershing’s co-CIO. “But you need to look at the broader picture and the overall cost of doing something tactically versus the leverage you get from a broader solution. To do something correctly doesn’t necessarily take longer—you just have to think about it earlier. Don’t get me wrong, Suresh is very, very aggressive in terms of deliverables. He’s very task-oriented and expects the people who work for him to be the same. This is not a person who wants to go into a room and draw pictures and analyze things forever—he wants to get to the solution, but he doesn’t fall into the trap of, ‘Let’s just solve this one problem and move forward.’”