Custody Services Global Market Report 2020-30: Covid 19 Growth and Change

Custody Services Global Market Report 2020-30: Covid 19 Growth and Change

  • July 2020 •
  • 200 pages •
  • Report ID: 5930665 •
  • Format: PDF
Major players in the custody services market are Bank of New York Mellon, Citigroup, JP Morgan Chase, State Street Bank and Trust, BNP Paribas, Northern Trust Corporation, HSBC, Societe Generale Securities Services, Brown Brothers Harriman & Co., and Caisse d’Epargne Investor Services.

The global custody services market is expected to decline from $66.1 billion in 2019 and to $64.27 billion in 2020 at a compound annual growth rate (CAGR) of -2.8%. The decline is mainly due to economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. The market is then expected to recover and reach $80.96 billion in 2023 at a CAGR of 8.00%.

The custody services market consists of revenue generated by services provided by a custodian to investors. Custody service is broadly characterized as the safekeeping and servicing of an investor’s assets. The services rendered by a bank custodian include the transaction and settlement, safekeeping and recording of marketable assets and cash to customers. A relationship of custody is legal, and the facilities rendered for a client varies.

North America was the largest region in the custody services market in 2019. Asia-Pacific is expected to be the fastest-growing region in the forecast period.

In March 2019, Forge, a company that provides custom liquidity solutions to private companies and their employees, and offers pre-IPO opportunities to institutions and investors, acquired IRA Services, a trust company that provides custodial services for retirement accounts managed by individuals and mid-to-large sized institutions, for $55 million. By acquiring IRA Services, Forge expanded its support offerings for private market securities, and more importantly, has become a one-stop-shop for private market investors who will no longer have to transfer shares acquired with Forge to external custodial trust.

The custody services market covered in this report is segmented by service into core custody services; ancillary services; core depository services; other administrative services.

The increasing competition is a key factor hampering the growth of the custody services market. The market for custody services is highly competitive with numerous banks that provide custody services in addition to other banking services, on a global, regional, or local scale. The price competition, especially, is causing enormous pressure on the banks in the global market. Many custodians find it challenging to keep up with high volumes and offer competitive prices. Traditional players in securities services such as multinational custodians, local custodians and specialists in fund management are experiencing increasing competition from Central Securities Depositories (CSD), Central Counterparty Clearing Houses (CCP), and outsourced service providers. Fund services professionals are increasing competitiveness by considerably building new and aimed offers. Therefore, increasing competition from various areas is expected to hinder the growth of the custody services market.

Automation and standardization is a key factor driving the growth of the custody services market. The custody services industry is focusing on using technology to improve efficiency. The automation and standardization of core custody services and operations result in higher visibility, enhanced productivity due to operational efficiency, and cost reductions for customers, improve quality of service, and allow the custodian to react quickly to future needs. Due to the automation and standardization of custody services, in the coming years, the asset-centric model is expected to be augmented by a more data-centric, open platform method where the custodian will have access to a variety of available services. For instance, an automated reporting system provides daily reports of exceptions, securities available for loan, securities on loan, valuation of cash collateral, daily mark-to-market information, and margin calls. Therefore, such automation and standardization features are expected to drive the growth of the custody services market.