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Article
Asset servicers survey
Navigating through the storm
Article
Asset servicers survey
Navigating through the storm
The asset servicing and management sectors alike face an increasingly unpredictable environment due to mounting fee pressures, innovative product development, expanding regulations, an unstable macroeconomic background, and last but in no way least, the COVID-19 outbreak.
In this context, Deloitte has launched an annual survey among European investment management industry players to gain a holistic view of today’s market needs and challenges, to capture recent evolutions and anticipate future trends.
The latest edition, focusing on asset servicers, welcomed the participation of 10 global players located in Europe and the US with a combined €74 trillion assets under custody (AuC), i.e., about 50% of the global amount. The participants are global players from various countries of origin that provide a wide range of services to their clients, including fund administration, transfer agency, management and various ancillary services, relevant to asset managers and final investors.
5 main results emerged from this year’s survey that profoundly affected the entire asset management value chain.
To face the growing challenges posed by digitalization and data, asset managers are redefining their service offering to become digital front runners.
Service Provider technology breakthroughs - Innovative data management?
To face the growing challenges of digitalization and data, asset managers are redefining their service offering to become digital front runners
Digital and customization are key expectations of investors
Investors’ top two expectations according to asset servicers :
A seamless customized investment experience according to 70% of asset servicers
Access to a portfolio of digital support in real-time according to 80% of asset servicers
By a cascade effect, digital capabilities are increasingly essential for asset managers
of asset servicers consider digital capabilities to be among the top three important criteria asset managers consider when selecting asset servicers
As a result, asset servicers will adapt their development plans towards more digital and data offerings
Asset servicers will propose more end-to-end digital solutions, either through outsourcing services or as self-service solutions, giving accessibility and autonomy to asset managers regarding their data and processes
Asset servicers will become the data aggregator of the industry
100% of asset servicers share this vision of asset servicing in 5 to 10 years
80% of asset servicers share this vision of asset servicing in 5 to 10 years
OPERATING MODELS - CAN ASSET SERVICERS REINVENT THE OPERATIONAL WHEEL?
Barriers between front, middle and back office services are likely to be broken down in the near future, affecting the operating model of most asset servicers
Technology is likely to alter the boundaries between front, middle and back office activities
The lines between front, middle and back office activities will fade thanks to technology, which will eliminate lower value functions.
80% of asset servicers share this vision of asset servicing in five to 10 years
Therefore, creating a global front-to-back client service emerges as an opportunity for asset servicers
of asset servicers consider expanding the value chain to offer front office services to be a solution to face current and upcoming market challenges
As a result, operating models will be redefined
Asset servicing will support an increasing set of capabilities to move even closer to the investment decision and will see a continued expansion of the traditional outsourced activities.
80% of asset servicers share this vision of asset servicing in five to 10 years
Alternative investments - Alternative opportunity?
To seize business opportunities stemming from alternative asset classes, asset servicers will adapt their capabilities, mainly with in-house resources
The rise of alternative asset classes represents a growth opportunity
of asset servicers see the most significant growth opportunities in alternative investments
Consequently, asset servicers will need to adapt their capabilities
of asset servicers intend to react to the rise of alternative products by creating a dedicated team for alternative investments
of asset servicers intend to react to the rise of alternative products by building capabilities in-house from scratch
Sustainability and ESG - The challenging rising star?
Mainly driven by the expanding regulatory framework, most asset servicers have started integrating environmental, social and corporate governance (ESG) into their offering, affecting their business models
Asset servicers have a growing interest in sustainability topics
of asset servicers plan to change their process to integrate sustainability topics into their own business in the next three years
The emergence of a sustainable finance regulatory framework is one of the main drivers
of asset servicers consider ESG compliance to play a significant role in their strategy development
Integrating sustainability will affect their current activities
Integrating sustainability in their activities is likely to mostly affect the following departments:
Products
Top 3 for 89% of asset servicers
IT
Top 3 for 56% of asset servicers
Corporate governance
Top 3 for 44% of asset servicers
The use of new ESG tools is likely to change their organizational models
Yet, no specific organizational model stands out:
COVID-19 – accelerator or threat?
The COVID-19 crisis has disturbed operations and main fund administration activities, forcing asset servicers to adapt and react to this unprecedented situation
Operations have been hit hard by the crisis
of asset servicers consider the COVID-19 crisis to have affected their operating model (vs. 67% for innovation and projects, 50% for strategy and vision 33% for service coverage)
Consequently, most asset servicers are setting up mitigation plans
of asset servicers plan to undergo process optimization and digitalization to mitigate crisis-related challenges
However, finding a new normal way of working is the highest priority
of asset servicers plan to mitigate COVID-19 challenges by reviewing HR policies and ways of working
Contacts
Deloitte Luxembourg
Vincent Gouverneur |
Frank Lichtenthaeler |
Xavier Zaegel |
Simon Ramos |
Vanessa Leuters |
Elodie Van de Woestyne |
Deloitte Ireland
David Dalton |
Julie Farren |
Deloitte United Kingdom
Tony Gaughan |
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