Major players in the asset servicing market are National Australia Bank Limited, CACEIS, BNY Mellon, HSBC, JP Morgan, Citi, The Bank of New York Mellon Corporation (BNY Mellon), State Street Corporation, UBS and Clearstream (Deutsche Börse Group).
The global asset servicing market is expected grow from $499.12 billion in 2020 to $553.45 billion in 2021 at a compound annual growth rate (CAGR) of 10.9%. The growth is mainly due to the companies resuming their operations and adapting to the new normal while recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $786.99 billion in 2025 at a CAGR of 9%.
The asset servicing market consists of services for wealth management companies and capital markets.Asset servicing comprises services such as reorganization and proxy services, safekeeping services for physical securities, dividends, and electronic registration & transfer of securities.
The assets servicing industry is a critical component of global financial markets and plays a vital role in the safekeeping of financial assets.
Globalization acts as a major driver for the growth of the asset servicing industry.According to a study on global asset servicing, nearly 60% of assets services in Assets Under Administration (AUA)/Assets Under Contract (AUC) predict that globalization is likely to be a strong driver for the asset servicing market’s growth over the coming years.
The players dealing in assets servicing industry are majorly focusing on APAC markets and other growing economies.Moreover, according to the BNP Paribas Securities Services article published in January 2020, India was expected to experience impressive growth in assets management and servicing industry owing to the increasing working population, the rising buying power of the populace, and expected growth in the GDP of the country.
Thus, globalization creates a large avenue for the expansion and growth of the asset servicing market over the coming years.
The stringent regulatory framework is predicted to limit the growth of the asset servicing industry over the forecast period.According to Funds Europe’s asset servicing roundtable, rising global regulation is adding cost and risk to asset servicing, creating a requirement for asset servicers to constantly engage with the client and the regulators.
In addition to this, according to EY’s new opportunities for asset servicing study, nearly 75% of the companies see the impact of regulations as the greater risk facing the asset servicing industry. Therefore, the increased scrutiny from regulatory agencies is anticipated to hinder the asset service market’s growth in the coming years.
The asset servicing market covered in this report is segmented by service into fund services; custody and accounting; outsourcing services; securities lending and by end-user into capital markets; wealth management firms.
Robotic process automation (RPA)/ automation is a major trend shaping the growth of the asset servicing market.Robotic process automation alone could reduce the headcount by 60-70% in the assets servicing industry while also achieving cost savings of approximately 30-40%.
Robotic process automation (RPA) refers to a set of software tools known as bot or robots that are used to perform a repetitive or routine business process which is currently used by transaction processing team or service centres.RPA can replace manual tasks involved in assets servicing such as reconciliation, trade processing, and reporting for regulators and clients, reducing the time required with cost-efficiency.
For instance, the ANZ Banking Group was one of the early ones to adopt RPA aggressively and automated its HR, finance, and technology processes in its Bengaluru hub creating thousands of bots.
In April 2020, JP Morgan has sought to take whole ownership of China International Fund Management (CIFM), a local assets management firm for an amount of $1 billion.This step was taken following China’s reforms on the elimination of caps on foreign companies taking full control of local assets management operations.
This acquisition is expected to enable JP Morgan’s long-term involvement with CIFM and strengthen the company’s position in the Chinese market. China International Fund Management (CIFM) was founded in 2004 and offers assets management and related services to China.
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