Citi

There is some slippage in the average scores by comparison with last year, but then the returns of 2017 were of an unusually superior calibre. Part of the explanation is that Citi services clients that are harder to please. More than half of its respondents are larger fund complexes of the kind that prefer a major custodian bank with a global presence to be a specialist fund administrator.“ Global presence [ and ] dedication to account” are what one client likes best. Importantly, the less-than-stellar scores are also concentrated in a narrow range of service areas. Relationship management and client service is not one of them. Here, an excellent score is bolstered by multiple testimonials.“ Staff is always responsive and pro-active,” writes one respondent.“ Great continuity of staff.” A second appreciates“ amazing customer service” and a“ great relationship,” while a third says that“ Citi consistently puts tenured and experienced personnel on our account.” Reporting, and reporting technology, are an issue Citi has in common with other administrators. Adding the“ ability to customise” would please one client, while others would appreciate“ some improved reporting capability” or an“ increase [ in ] online reporting, report writing and custom reporting.” But these are mainly wish-list items. It would be a mistake, exposed by the detailed scores, to conclude that reporting is a major shortcoming for Citi.“ Accuracy of information provided is excellent,” says one respondent. That said, Citi collects its lowest score for client-facing technology. Doubtless this partly reflects current zeitgeist. A sense of the future potential of technology helps to explain the ordinary scores in custodial( asset servicing, but especially cash management) and operational services( reconciliations and settlements) too.“ Settlement responses and market-opening lead time” are the areas where Citi could improve, according to one respondent. A second would value an“ indicative NAV,” though there is nothing wrong with the Citi scores for fund accounting. In fact, it is the client who would like to see the bank“ testing blockchain technology for payments and ease of communication moving forward,” who really speaks to the spirit of the age. Like other providers, Citi is, in any event, working – in conjunction with a technology house and a data vendor – on a solution to the modernised reporting challenge set by the SEC. Solving the compliance challenges set by the SEC will make it more difficult to overcome the sense that Citi is not particularly price competitive. It is already hard for banks, which carry the burden of capital requirements, to compete with non-bank administrators on price – though the Citi score for value suggests clients know they will always get what they pay for. As it happens, Citi thinks the combination of regulation and technology can in some areas reduce costs to managers. While passing on most of the costs of compliance is unavoidable, the bank believes that at least one regulatory change – namely, Rule 30e-3, which will allow mutual fund companies to default to emailing investors annual shareholder reports – will actually save managers money. Citi is also investing heavily in its exchange traded funds( ETFs) platform. Despite regulatory anxiety that ETFs pose systemic risks, this looks like a sensible move. With downward pressure on fees, driven mainly by the switch to passive strategies, modern technology will enable Citi to capitalise on any simplification and acceleration of the ETF issuance process. And if revenues in asset management continue to fall, Citi will be well placed to take advantage of the consequent increase in outsourcing and consolidation.