Custody Service Global Market Report 2021: COVID 19 Growth And Change to 2030

Custody Service Global Market Report 2021: COVID 19 Growth And Change to 2030

  • May 2021 •
  • 175 pages •
  • Report ID: 6070263 •
  • Format: PDF
Major players in the custody service 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., Caisse d’Epargne Investor Services.

The global custody service market is expected grow from $24.42 billion in 2020 to $26.79 billion in 2021 at a compound annual growth rate (CAGR) of 9.7%. 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 $36.75 billion in 2025 at a CAGR of 8%.

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.

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.

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.

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

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.