State Street's $2.6 billion purchase of Charles River last year thrust it into direct competition with Bloomberg and BlackRock for control of trading desktops across hundreds of asset managers.

The man charged with overseeing the strategy is CEO Ronald O'Hanley, a 20-year veteran of the investment management industry who assumed his role January 1.

O'Hanley's building a one-stop shop to handle anything an investor might need, from pretrade analytics all the way through to post trade reporting and reconciliation.

The stakes are high. State Street's stock price is down 40% since the Charles River deal.

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Ronald O'Hanley doesn't immediately come across as a fierce competitor.

The State Street CEO speaks in a low voice free of the bravado that other leaders often exhibit. He doesn't stand on ceremony. And he runs State Street, a leader in asset custody, what many consider to be a sleepy corner of banking.

But O'Hanley now finds himself competing against some of Wall Street's most formidable foes. With last year's purchase of trading software provider Charles River Development for $2.6 billion, State Street has thrust itself into a dog fight against the likes of Bloomberg LP and BlackRock for control of the computer screen used by thousands of buy-side traders.

The three are now battling over a fractured market that promises to deliver attractive revenue opportunities as Wall Street seizes on the data revolution. As data and information becomes more commonplace, traders are looking for technology to provide more insight. And as investment styles migrate to passive strategies from active ones, they're looking for any edge they can get.

For State Street, it's an ambitious bet that will take time to play out and may help it weather structural changes impacting its asset management clients. The bank's stock is down more than a third since the Charles River deal was announced, reflecting investor concerns around the firm's ability to execute on the strategy and the larger trends buffeting its customer base.

See also: Wall Street's massive tech spend has reached an 'inflection point' as billions in investments are starting to pay off

O'Hanley, CEO since January 1, doesn't like to paint the task in such stark terms, but posits that State Street's history of providing middle and back office support will give it a leg up. The idea is that by combing those elements with Charles River's front office technology, State Street will be be able to offer a truly front to back solution, lowering costs and offering cutting edge insights with data and analytics.

"We had a lot of the traditional front office providers coming by and putting the proverbial arm around the shoulder and saying why don't we partner, recognizing that they were the front office and we were the middle and back," he said in an interview of the sidelines of this year's Milken Institute Global Conference in Beverly Hills, declining to name names. "But we realized that if you were going to solve the cost problem and the data problem then we really needed to be front to back."

If clients want to use another platform, that's OK too. State Street is developing its solution so that it can work with Bloomberg, BlackRock, or the hundreds of other vendors that sell to Wall Street. Earlier this year, the firm partnered with Axioma to makes its risk and portfolio management, and regulatory reporting tools available to clients.

O'Hanley can talk the talk. The 20-year veteran of the investment management industry joined State Street in 2015 after stints at Fidelity Investments, Bank of New York Mellon, and McKinsey, and his comments make it clear that he understands how and why clients turn to State Street. He ran the Boston-based lender's asset-management arm before being named president and chief operating officer and heir apparent to ex-CEO Jay Hooley in November 2017.

At some point, the execs realized that while State Street was the biggest in the world at the middle and back office work of reconciling accounts, that work would become "table stakes," O'Hanley said. Left unsaid is that it wouldn't be as lucrative to provide those services in the future.

See also: Wall Street is chasing a data gold rush. Here's our deep dive on its efforts to crack the code.

At first look, State Street need not worry. The bank's revenue of $12 billion in 2018 climbed 6.8% that year, itself an improvement over 2016.

But investors aren't impressed. After sending the stock price to a more than 20-year high in January 2018, investors got cold feet, pushing the stock down almost 18% through mid-July. When the deal with Charles River was announced, the stock price dropped 7.4%. Since then, it's fallen another 36%.

State Street's asset management arm, State Street Global Advisors, is facing many of the same challenges as the clients of its custody business. The bank suffered $22.6 billion in outflows last month, according to Morningstar data. The S&P 500 ETF that it manages, the hugely popular SPDR, lost almost $17 billion, which Morningstar attributed to higher fees and tracking error.

See also: 'The next frontier for us': Inside State Street's multibillion-dollar bet on financial data

Those struggles mirror the broader trends leading asset managers to hunt for lower cost technology options. In fact, it was only after SSGA's search for a vendor led it to choose Charles River that the bank's top execs realized it could help the other side of the firm to shift its broader strategy, O'Hanley said.

Asset managers are battling a tidal wave that's seen trillions of dollars in funds move from higher-paying active accounts to lower-fee passive accounts. Retail brokerages and other distributors of mutual funds are demanding more money, and a hodge podge of systems built up over years of acquisitions have begun to break down or require a greater share of technology costs, the CEO said.

State Street's plan is that it can address all of that by offering a one-stop shop, front to back solution that can offer pre-trade analytics and insight all the way to post trade reporting and account reconciliation. Having all that data under one roof should allow the bank to provide better analytics as well, he said.

"The fee structure has come under intense pressure and put these organizations in a position where they need to rethink their tech infrastructure," said Larry Tabb, founder of the eponymous Wall Street consulting group. "Partnering with a group like State Street makes a lot of sense because State Street can not only manage an increasingly larger portion of their tech, but the funds can outsource their operations, and thus consolidate their operations with fewer players. And that should bring some efficiencies."

It's a fractured market: Less than 10% of clients currently rely on one of the three providers for front to back functionality, O'Hanley estimates. Charles River, which serves more than 25,000 clients across the globe, is installed on roughly the same number of desktops as BlackRock's Aladdin software. Bloomberg has more than 300,000 desktop terminals.

One challenge, according to Tabb, will be to instill a stronger culture of partnership and collaboration across the combined enterprise. Charles River has not been known historically for being open to partnering with outside vendors, or competitors, he said. It's a point that O'Hanley is eager to refute.

See also: BlackRock's latest $1.3 billion tech deal shows it wants to be more than an asset manager

Even if BlackRock, Bloomberg or others consume a bigger slice of the market, State Street will be ready with a platform that's open architecture and able to interact with third-party vendors or service providers, O'Hanley said.

"If you think about the great technology platforms in the world, what has set them apart is not that they own everything but that it's a platform that creates a network that everyone wants to be a part of," he said.

While its early days, the bank has already found success in selling its end to end solution. State Street announced June 11 that it had entered into a letter of intent with Lazard Asset Management to provide its inclusive servicing capabilities. The bank's salespeople were in talks about 110 clients interested in purchasing those capabilities, O'Hanley said in April.

"It won't be a slam dunk," said Tabb. "But they have a tremendous opportunity to play into a market that is really searching for more integrated solutions."