Global Custody Operations: Real Service or Lip Service?

December 10, 2001

Abstract

Boston, MA, USA December 10, 2001


Global Custody Operations- Real Service or Lip Service?  

Celent estimates global custodians will invest US$12 billion through 2005 in order to finalize straight through processing initiatives, bolster their sub-custodian networks, and augment outsourcing capabilities.

In a new report “Global Custody Operations – Real Service or Lip Service?”Celent Communications examines the technology and operational initiatives undertaken by leading global custodians in order to position themselves as world-class contenders in the US$41 trillion global custody marketplace. Topics covered include: preparation for straight through processing, platform integration, workflow solutions, and Internet capabilities. In addition, the report looks at organizational changes being made to improve customer service and reduce staff turnover.

“By and large clients are pleased with the steps being taken by their custodians,” says Pamela Brewster, Celent analyst and author of the report. “In fact, asset managers have been so impressed by the upgrades in their custodians’ reporting and processing systems that they are increasingly outsourcing activities such as fund accounting and reporting.

According to the report, outsourcing represent a US$25 billion revenue opportunity. However, internal resource constraints and client control issues may dampen prospects.

Europe will be a major playing field for global custodians during the decade driven by a projected €5 trillion increase in European-based assets due to pension privatization efforts. Pan-European firms such as HSBC, BNP Paribas, and Deutsche Bank are well positioned to capture some of these flows. However, they will likely face competition from US-based custodians who will either acquire or form partnerships with smaller European custodians.

“With so many initiatives before them, perhaps the greatest challenge for global custodians will be the realization that they can’t be all things to all people,” adds Pamela Brewster. “To that end, we believe the leading custodians will make strategic decisions about the mix of services and products they offer and the clients they serve.”

 

A Table of Contents is available online.

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA  December 10, 2001

Global Custody Operations- Real Service or Lip Service?

Return to report Abstract

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET BACKGROUND 6
  Consolidation Trends 7
  Current Factors Shaping the Industry 9
TECHNOLOGY OVERVIEW 15
  Platform Integration 15
  Straight Through Processing 16
  Client-Query Systems 18
  Internet Capabilities 18
  Hardware Challenges 19
  Benefits for Clients 20
  Technology Spending 22
CUSTOMER SERVICE 23
  Organizational Structure 23
  Training 24
  Client Outreach 24
CLIENT RESPONSE TO INITIATIVES 25
  Positive Points 25
  Negative Points 25
FUTURE OUTLOOK 27

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