1. Pricing Power.
    Even with its scale, Bank of New York Mellon acknowledges it does not have pricing power with its top 100 clients – which are behemoths themselves – when it comes to asset servicing. It does have some leverage on smaller clients, but the top 100 comprise a majority of BoNY's asset servicing sales.

    To increase sales, it's focusing on cross-sell opportunities. This includes selling laterally across its product lines, deepening its services from its back office foothold, and expanding operations globally (it's already in over 30 countries) to enhance cross-market opportunities.

    A rough metric to keep an eye on to gauge BoNY's success in this effort is its percentage of non-interest revenue ($11.5 billion) as compared to its servicing assets under management ($27.9 trillion). That ratio is currently 0.041%.
  2. Use of capital.
    Because of the business it's in, Bank of New York Mellon tends to be quite conservative with the asset side of its balance sheet. Instead of trying to chase higher margins, the bank is happy to keep a large portion of its interest-earning portfolio in ultra-safe vehicles such as deposits with the Fed and Treasuries. It also keeps its portfolio safer by limiting its duration. We can see the effects of these moves in a net interest margin that's less than half that of a normal bank.

    From a regulatory standpoint, BoNY is ahead of its own schedule in gearing up for tightening international capital standards — its Basel III tier 1 common equity ratio is at a relatively healthy 9.3%. Management claims to be averse to further large acquisitions and instead interested in allocating capital to spur organic growth and further strengthen the balance sheet. Excess capital beyond that could be used for dividends and share buybacks, contingent on regulator approval.
  3. Costs.
    Like many banks, Bank of New York Mellon is in the middle of a cost-cutting initiative. The goal is $650 million to $700 million in annual savings by 2015, driven largely by technological efficiencies. Although sales initiatives and items like money market fee waivers will also have an impact, we'll want to gauge the efficacy of these initiatives (and its overall use of scale) in margins. In recent years, margins have actually been deteriorating a bit.