Asset Servicing Market Expected to Reach $264.6 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Asset Servicing Market, By Service (Fund Services, Custody and Accounting, Outsourcing Services, Securities Lending, and Others), By Enterprise Size (Large Enterprises, and Small and Medium-sized Enterprises), and By End User (Capital Markets, Wealth Management Firms, and Others): Global Opportunity Analysis and Industry Forecast, 2022-2032". The asset servicing market was valued at $83.7 billion in 2022, and is estimated to reach $264.6 billion by 2032, growing at a CAGR of 12.5% from 2023 to 2032.

Asset servicing is the backbone of the financial industry, providing critical support services to investors, asset managers, and other stakeholders. It encompasses a wide range of activities, including custody, settlement, trade processing, corporate actions, and others. Moreover, with the increasing complexity of financial markets and the growing demand for transparency and accountability, asset servicing has become a crucial aspect of the investment process.

Furthermore, asset servicing is a crucial aspect of the financial industry that involves managing and protecting assets on behalf of clients. It includes a range of activities such as custody, fund administration, and securities lending. Asset servicing firms provide a range of services to their clients, including safekeeping of assets, managing cash flows, and providing reporting and analytics. They also provide other services such as tax management, compliance, and risk management to the asset management group.

Increase in investment complexity is one of the primary drivers of the asset servicing market. Furthermore, the growth of the asset servicing market is driven by the ever-evolving landscape of financial regulations. In addition, with globalization continuing to shape the investment landscape, asset servicing providers are in high demand as they facilitate the seamless management of assets across borders. However, high cost pressures on firms for maintaining asset servicing is one significant factor hindering the growth of the asset servicing market. Asset servicing industry provides essential and complex services, which require a significant investment in technology, skilled personnel, and infrastructure.

Moreover, the growth of the asset servicing market is hampered by the rapid pace of technological change and the accompanying cybersecurity risks. On the contraty, increase in popularity of alternative investments is one of the major asset servicing market trends that provide lucrative opportunities for asset servicing market growth. Alternative investments include assets such as private equity, hedge funds, real estate, and venture capital. These investments have gained traction as they offer diversification and potentially higher returns as compared to traditional assets such as stocks and bonds.

By enterprise size, the large enterprises segment dominated the asset servicing market in 2022. This is attributed to the fact that large enterprises manage substantial investments and portfolios and require specialized services to handle the complexity of their assets efficiently, which drives the adoption of asset servicing in the large enterprises. However, the small and medium-sized enterprises segment is the fastest-growing segment during the forecast period. This is attributed to the fact that as SMEs grow and expand their investments, they require specialized services to manage their assets effectively and ensure compliance with regulations.

Region-wise, North America dominated the asset servicing market in 2022. This is attributed to the demand for specialized expertise and the trend towards outsourcing, making it a vital part of the region's financial landscape. However, Asia-Pacific is expected to be the fastest-growing region during the forecast period, owing to the region's economic expansion and increase in international interest in Asian investments, highlighting the importance of these services in the financial sector.

The COVID-19 pandemic had a significant impact on the asset servicing market size, owing to the market volatility and uncertainty that led to an increase in demand for asset servicing as investors sought expert help to navigate the unstable financial landscape. However, as the pandemic continued, some segments of the asset servicing market faced challenges. Therefore, the asset servicing market experienced changes in demand and the way services were delivered during COVID-19. While some areas saw growth due to increased market complexity, others faced challenges, resulting in a complex and evolving landscape for asset servicing industry.     

Key Findings of the Study

• On the basis of service, the custody and accounting segment accounted for the highest asset servicing market share, in terms of revenue in 2022.
• On the basis of enterprise size, the large enterprises segment attained the highest market share in 2022.
• On the basis of region, North America generated the highest revenue in 2022.  

The key players operating in the asset servicing market analysis include Northern Trust Corporation, UBS, The Bank of New York Mellon Corporation, Fenergo, JPMorgan Chase & Co., HSBC Group, Credit Agricole, Deutsche Bank AG, Broadridge Financial Solutions, Inc., and CIBC Mellon. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.