[ D O M E S T I C S U R V E Y | M A L A Y S I A ]
A tougher crowd to please
Client expectations of their service providers appear to have grown with a corresponding decrease in scores achieved.
Some 70 % of respondents to this year’ s Malaysia domestic custody survey are returnees from last year’ s survey. It is therefore significant that the 2017 Survey of domestic custody services in Malaysia shows a measurable decline in aggregate scores. At a category level, results are down by between 0.23 and 0.75. Quite why this should be is unclear, as the additional client comment provided does not identify any common thread of dissatisfaction. The size of individual respondents as measured by assets under management continues to grow, however, and larger clients tend to be both more demanding in terms of service requirements and harsher in their assessments of the service delivered.
“ Interestingly, one of the steeper drops was in Special Operations.”
As Figure 1 highlights scores in all 10 categories were lower this year than 12 months ago. While eight of these still record results in the‘ Good’ range( 5.00 – 5.99), two – Operational Reporting and Technology – are now regarded as merely‘ Satisfactory’. Interestingly, one of the steeper drops(-0.61) was in Special Operations, which includes both dealing with cross-border securities and the processing of Islamic funds. The latter is an area where Malaysia is seeking to establish a global reputation and which is likely to be a promising source of growth for the market as a whole. It is not, however, a capability that local investors responding to this year’ s survey yet place high on their list of service priorities. Figure 2 ranks the relative priorities listed by respondents this year and last. Special Operational Requirements ranks eight out of the 10 categories, down from sixth in 2016. Only 8.4 % of survey participants ranked it first or second, while three-quarters listed it between sixth and tenth; in other words, below the halfway mark in terms of concerns. Interestingly, this category seemed to be increasing in importance, having risen from tenth to sixth. Given the expected contribution of Islamic finance in general to the future growth of the Malaysian market, we would expect the ability to correctly handle the processing of assets in a
FIGURE 1: AVERAGE SCORES BY CATEGORY
Category 2017 2016 Difference
Relationship Management and Client Service |
5.29 |
5.81 |
-0.52 |
Cost and Value Delivered |
5.00 |
5.63 |
-0.63 |
Settlement and Cash Management |
5.22 |
5.72 |
-0.50 |
Asset Servicing |
5.36 |
5.59 |
-0.23 |
Special Operational Requirements |
5.19 |
5.80 |
-0.61 |
Operational Reporting |
4.87 |
5.62 |
-0.75 |
Technology |
4.94 |
5.51 |
-0.57 |
Fund and Unit Accounting and Valuation |
5.11 |
5.79 |
-0.68 |
Trustee and Administration Services |
5.33 |
5.89 |
-0.56 |
Reputation and Asset Safety |
5.46 |
6.06 |
-0.60 |
OVERALL WEIGHTED AVERAGES |
5.19 |
5.73 |
-0.54 |
FIGURE 2: RESPONDENT PRIORITIES
Category 1 or 2(%)
3 or 4(%)
6 to 10(%)
Rank 2017
Settlement And Cash Management |
43.37 |
30.12 |
18.07 |
1 |
2 |
Relationship Management and Client |
33.73 |
32.53 |
13.25 |
2 |
1 |
Service |
|
|
|
|
|
Cost And Value Delivered |
28.92 |
21.69 |
22.89 |
3 |
3 |
Reputation And Asset Safety |
24.10 |
13.25 |
46.99 |
4 |
4 |
Technology |
18.07 |
22.89 |
50.60 |
5 |
8 |
Asset Servicing |
12.05 |
20.48 |
56.63 |
6 |
5 |
Operational Reporting |
12.05 |
13.25 |
55.42 |
7 |
7 |
Special Operational Requirements |
8.43 |
2.41 |
74.70 |
8 |
6 |
Fund And Unit Accounting And Valuation |
3.61 |
24.10 |
39.76 |
9 |
9 |
Trustee And Administration |
3.61 |
9.64 |
50.60 |
10 |
10 |
Services |
|
|
|
|
|
OVERALL WEIGHTED AVERAGES |
6.48 |
6.39 |
0.09 |
|
|
Rank 2016
66 Global Custodian Summer 2017