The asset servicing industry “plays a vital role in the safekeeping of financial assets, provides the infrastructure and connectivity for market participants and supports critical middle- and back-office operations of the world’s investment funds,” says Ernst & Young in their report “New opportunities for asset servicing”. The industry has growth by 16 percent on average during the last four years driven by regulatory environment and the investor demand for oversight.
In 37 interviews with 23 of the top 25 asset servicing companies (by AUA and AUC) in North America, Europe and Asia-Pacific (APAC), Ernst & Young focused on identifying key areas of focus and opportunities for growth for the industry, how firms develop their service offerings to meet client needs, how asset services evolve their operational models, key trends across their technology and data architectures as well as critical factors that lead to success in the mid term.
Doing so, EY identifies six drivers of growth. First, firms benefit from the growth in assets of their clients. As asset managers limit their exposure to their home countries, globalisation is a driver of growth for those asset servicers that have developed a global operating model. Third, increasing regulation pushes asset managers into using asset servicing. New products and the expansion into areas such as enhanced middle-office, post-trade compliance, regulatory reporting and data services. Fifth, asset services extend their platforms to a broader client base. Finally, data integration drives the need for asset servicers.
To benefit from this industry growth, companies have invested heavily to differentiate themselves. Key innovations are enhanced mid-office services (for 76% of survey participants), data aggregation and reporting capabilities (70%), end-to-end workflow management (54%), integrated front-office capabilities (41%), use of mobile Internet technologies (41%) as well as valuation services (41%).
To differentiate themselves, client services and expertise are seen as the most important differentiator. 72 percent of survey participants say so. Best in class technology (67%), breadth of products and services (61%), flexibility to customise offerings (42%), financial strengths of the organisation (33%) and the ability to held complex customer clients (19%) are further points of differentiation.
Please find the full report here: http://www.ey.com/Publication/vwLUAssets/New_opportunities_for_asset_servicing/$FILE/ey-new-opportunities-for-asset-servicing.pdf