Table Of Contents
Onkar Sumant
Akhilesh Animesh Prabhugaonkar
Asset Servicing: Did You Align Your Business to the Latest Trends?
Highlights:
- Introduction
- Evolution of asset servicing
- Upcoming trends in the asset servicing industry
- Dynamics of the asset servicing industry
- Innovative product launches in the industry
Asset servicing involves a custodian providing various services to clients whose assets are held in the custody of the custodian. The services that are generally provided by the custodian include tax services, corporate action processing, income and redemption payments, proxy voting services, etc. Moreover, it also includes portfolio analysis services and investment control. Hence, asset servicing is sometimes also known as custody services or investment management services.
Historical Evolution of Asset Servicing and Management
Modern asset management services find their origin in the industrial revolution era, when asset servicing and management became important for tracking business transactions. Though these asset management services didn’t necessarily offer insights into business analytics, they helped companies in preparing catalogs of the transactions and financial undertakings of the company. In the next phase, the asset servicing industry enhanced its functioning with the help of computers. The technological revolution kickstarted by the use of computers helped asset management companies to store and analyze data in a better way. However, business forecasting was still not that polished and sophisticated. This has been achieved in the present times, in the age of digitization. With the help of big data, AI, cloud computing, and machine learning, the asset servicing industry has been at its very best and can truly guide businesses through the uncertainties of the global economy.
Upcoming Trends in the Asset Servicing Industry
In the 21st century, the asset management industry has gained significant importance owing to the kind of function it performs. Asset servicing and management companies essentially help businesses survive and thrive in corporate competition. Naturally, aligning with the latest trends in the asset servicing industry becomes highly important for businesses operating in this sector.
Like all other financial services, the asset servicing industry has experienced a gradual shift due to the increasing adoption of disruptive technologies. One such technology is blockchain. The introduction of blockchain in custody services can improve the security of the entire financial system substantially. Moreover, the paperwork involved in securities processing is automatically reduced, which makes the business more cost-effective. Cognitive computing is another emerging technology that can transform the asset servicing industry by predicting future changes in the market based on historical data. Finally, integration of robotic process automation will help in performing repetitive tasks such as trade processing, reconciliation, etc.
Growth Opportunities Available in the Industry
The increasing complexity of investment portfolios has led to a surge in demand for asset servicing which will open up growth opportunities in the industry in the coming period. The rapid pace of globalization across the world will also strengthen the position of the industry. The growing popularity of alternative investments will also play a key role in widening the scope of this sector.
By end user, the capital market segment is predicted to amass an absolute revenue of $111,581.80 million from 2022 to 2032. On the other hand, the wealth management firms and others segments are likely to collectively hold a revenue of $69,362.68 million. On the basis of region, the India asset servicing market is expected to be the fastest growing with a CAGR of 23.2% in the forecast period.
Product Launches by major companies which have been Beneficial for the Industry
The presence of multinational investment banks and financial corporations makes the asset servicing industry extremely competitive. Furthermore, these major players have launched investment management services which further amplify the scope of the industry. For instance, in October 2022, BNY Mellon, the largest custodian bank in the world, announced the launch of its Digital Asset Custody platform which will offer both traditional and online asset servicing solutions.
Similarly, in May 2023, State Street Corporation, a financial service company, announced the launch of carbon asset servicing solutions for integration of carbon-related assets into portfolios. As per a statement released by the company, this launch will help the company to address the demands of the industry in a more comprehensive manner.
To summarize, the growth of the asset servicing industry can be attributed to integration of disruptive technologies in investment management services. Furthermore, innovative service launches by major companies will create favorable conditions for the industry’s growth.
For insights and recommendations on how to capitalize on the opportunities offered by the latest developments in the asset servicing industry, feel free to contact us. Moreover, we also offer in-depth analysis of the leading players and their strategies alliances in the industry.
