The asset servicing industry is going through fundamental changes.
Two types of changes can be distinguished: disruptive changes and medium to long term trends.
Disruptive changes alter the rules of the game. For example, Target 2 Securities, will transform the securities services industry and requires players that are active in this industry to review their business models. Without a review of strategical goals, the outcome of Target 2 Securities for established players will probably be to accept a significant decrease in market share.
Target 2 Securities is not the only newness in the securities industries. New regulations such as EMIR can also generate paradigm shifts. It is recommended that financial institutions assess the impact of new regulations on their business model. At best, market players will have to make changes to their operating model, e.g. how collateral is managed.
The industry is also confronted with changes that are less visible, i.e. the medium to long term trends. The undervaluation of such changes can seriously compromise the competitiveness in the long run. The evolution of how securities reference data is managed could be one of these trends, just as corporate actions processing could be another one.
All these changes and the fact that the world’s largest fund administrators and leading global custodians are in their maturity phase requires that asset servicers need to boost their business models.