[ I N D E P T H | G L O B A L C U S T O D I A N S ] reduce costs for custodians . Whether it ’ s through internal innovation or partnering with fintechs , the lightbulb moment has arrived in the custody world and leveraging tech and automation is a nearer reality than ever before . Secondly , and more importantly , there is opportunity in new services . The front-to-back theme is nothing new , but is a great way to derive more from existing clients . Private markets also represent a greenfield opportunity to gain new clients and service a growing asset class , while ETFs fall into a similar category . “ There are new revenue , technology , and asset management trends that are encouraging securities services firms to further innovate and evolve , capturing more revenue from their clients through a significant expansion in services and value proposition ,” noted Coalition Greenwich in its report . As they incorporate more AI , ML , and NLP to handle reconciliations and other such operational processes , those productivity gains should continue . In addition , there are newer streams of revenue outside traditional custody offered in response to changing asset manager needs around expanded services , data , and new product strategies .” Data is another area where client demand is soaring , but monetising this is another challenge . Lucrative gains could be made if custodians can give insight to the front-office or crack the ESG conundrum currently facing fund managers . Digital assets truly represent an opportunity for custodians , and even if we have discussed the concept ad nauseum over the past few years , we will soon see this new asset class benefit custodians . Not only can the concept of tokenisation create efficiencies and open up illiquid asset classes for trading and services , but the cryptocurrency industry is crying out for incumbent custodians amid a slew of controversies and barriers to institutional uptake . To prove just how enormous the potential is , Justin Chapman , global head of digital assets and financial markets at Northern Trust , tells Global Custodian that : “ By 2030 , we expect that between 5 % and 10 % of Northern Trust ’ s assets under custody and administration will be digital assets – either cryptocurrencies , stablecoins , central bank digital currencies ( CBDCs ), or tokenised assets .” One thing we can also expect over the next 12 months is a pricing increase across the market . Only State Street have publicly said they will be increasing prices , but with inflation rife across the world , others will likely follow suit . While we ’ ve placed emphasis on AUC / A in recent years , this trend has taken a back seat as revenues are now the headline of the era , a trend which benefits custodians , their employees and the collective industry . With the advancements in automation , technology and new asset classes , the upward trajectory could be set to accelerate well into the future .
“ There are new revenue , technology , and asset management trends that are encouraging securities services firms to further innovate and evolve .”
COALITION GREENWICH
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