The global custody service market was valued at US$24 billion in 2020 and is expected to grow at 8% until 2022. The market is highly concentrated, with the top 15 custodians holding more than 70% of the total assets under their custody.
Operational inefficiencies impair core custodial processes, such as asset servicing, corporate actions, and settlements. Hence, custodians need to invest in automation and process simplification to cut these operational overheads.
Additionally, the industry needs to ensure the safekeeping of digital assets, whose valuations have been rising exponentially. Digital assets’ growth is evident from the rise in the cryptocurrency market’s value, increasing from US$578 billion in Q4 2020 to US$1.85 trillion in Q3 2021 due to increased traction in retail investments across digital assets.
Diverse financial institutions are working to allow investors to securely store, buy, and sell digital assets. But for digital assets trading to gain momentum, institutional investors need to be assured that these are safe. This means that the future of these financial institutions may now rest on a digital asset custody foundation to offer fast, secure, and seamless experiences. Taking a cue, custodians are increasingly investing in platforms that will help them manage both traditional and digital assets. These are specialized platforms that combine security with speed, scalability, and operational flexibility. As these platforms encourage higher asset investment, such digital custody offerings are vital for the expansion of various assets. In this research, we discuss the benefits of a platform-based approach for custodians and depositors and recommend ways to implement it.
Scope
Industry: banking and financial services, custody and depository services, IT services
Geography: global
Contents
In this report, we examine:
- Evolving priorities for custody and depository services
- Potential challenges with the existing model
- A platform-led approach for a new market structure
- Key technology investments to build custody services of the future
Membership(s)
Banking and Financial Services Information Technology
Sourcing and Vendor Management
