ERI- IBSI’s whitepaper explores the evolving custody services industry

By Megha Bhattacharya

Custody offerings originated to provide safekeeping services when assets were in physical form. Having custody of assets enabled banks to offer services such as settlement and asset servicing. Custody services, since the early days, have evolved significantly. Currently, almost half of the global assets come under the custody of the four most prominent players. This has led to the development of sharp contrast between the annual growth rate of the assets and the increasing service fees of the competitors.

ERI and IBS Intelligence have collaborated on a whitepaper exploring the custody services industry. It identifies key drivers of change, emerging trends, challenges for Tier 2-3 banks and provides an outlook on the digital roadmap for these banks. It further highlights the custody lifecycle and the key services offered by the custodians in the financial services ecosystem.

The whitepaper talks about the latest developments in the custody services industry. It explores the changes brought about by emerging client preferences, the rising pace of digitisation, and emerging compliance requirements. The whitepaper also surveys the key considerations that need to be undertaken by Tier 2- 3 custodian banks and assists in the development of a digital roadmap.

Custodians aim to extend their support for new asset types such as digital assets and cryptocurrencies to enable their clients to access these assets safely and securely. In the current dynamic market of custody services, regulators and legislators are on their toes to ensure asset and client protection. Complying with regulations such as TARGET2-Securities (T2S), Central Securities Depositories Regulation (CSDR), Anti-Money Laundering (AML), or GDPR is critical for custodians. The paper discusses the importance of a system with secure communications, file sharing, data encryption, and well-defined access rights in the post-pandemic world.

For more insights on the Custody Services whitepaper, click here.