Playing Catch-up is Not Enough
To improve profitability and deal with increased regulation and market scrutiny, custody banks will need to reinvent themselves beyond asset safe-keeping and settlement.
The winners of tomorrow are already adapting to this new environment and creating new products and services while addressing changing demands.
Custodians with up-to-date workflows and structures, efficient and reliable data processing, and interlinked communications system are better able to service their customers globally across different asset classes.
Technology in this space is moving beyond its traditional role, evolving from operations and processing into providing customer insights. Data analytics offers an opportunity for custody banks to move up the value chain with integrated solutions by sourcing and executing deals and cross-selling across the bank with investment banking and private banking.
The leaders are also starting to leverage their expertise in risk management and assets safekeeping to create new revenue streams in transition management, global network management, and prime brokerage services.
Nascent technology such as blockchain, or distributed ledger, also offer the possibility of shorter settlement times, improved balance sheet efficiency, and the ability to share data for regulatory reporting and know-your-customer (KYC) requirements.
The custodians of tomorrow will need to embrace new technology, new services, new revenue streams, and new customer segments to thrive in the evolving banking landscape.