BNYMellon opens Silicon Valley lab to improve digital offerings Bank of New York Mellon has created a technology lab in the heart of Silicon Valley as it seeks to tap into new digital offerings, underscoring the threat the financial services industry is feeling from west coast technology groups. Banks have operated innovation centres in the region for years, but BNYMellon's move comes as a host of start-ups and groups including Apple are using technology and data to offer services once dominated by financial institutions. Suresh Kumar, BNYMellon's chief investment officer, said: "We're looking at the disruptions that are taking place in other industries - publishing, transportation, hospitality - and now you see a lot of disruption in the payment space and finance. We can't wait for someone to disrupt us and then react. We need to be in offensive mode here. Michael Gardner, head of the centre, said that the bank wants to tap into the "collaborative" culture that permeates the technology scene. It will hire 20 people by the end of the year and then will ramp up recruitment in 2015. Employees will be working on technology projects including Digital Pulse, BNYMellon's effort to harness the big data that flow through it. The innovation centre is in Stanford Research Park in Palo Alto, in front of the local offices of Tesla Motors, the electric car pioneer led by Elon Musk. BNYMellon joins other banks including Capital One and Wells Fargo, which have been running their own west coast labs either to develop their own technology or cultivate investments in tech start-ups. JPMorgan Chase created an incubator in the midst of the internet boom in the late 1990s, but "Lab Morgan" had a mixed record. Cygnifi, an online derivatives service provider, filed for bankruptcy shortly after being spun out of the bank but other early investments, including the trading platform MarketAxess and PayPal, the payment processing company, went on to make significant profits. One former bank lab employee said: "Not all labs are created equal. They can sort of be play things for corporate executives. BNYMellon has been under pressure from shareholders, including the activist investor Nelson Peltz, to cut costs and boost profits following six years of ultra-low interest rates that have eaten into the money it can make from safeguarding trillions of dollars worth of client assets. "Software is eating the world," said Mr Kumar, echoing the famous words of Marc Andreessen, the Netscape founder who is now one of Silicon Valley's most prominent venture capitalists. We obviously have a financial institution to run, but at the same time we are also interested in creating great new offerings.