Magazine article American Banker

Bisys Pads Its Lead in Bank-Fund Administration

Magazine article American Banker

Bisys Pads Its Lead in Bank-Fund Administration

Article excerpt

Bisys Group Inc., the top administrator of bank-managed mutual funds, has widened its lead over a shrinking field of rivals, according to data from Lipper Analytical Services, Summit, N.J.

In the quarter ended June 30, Bisys handled $82.9 billion in fund assets for its bank clients, up 51% from a year earlier. That's twice as much as second- place First Data Investor Services, which administered $40.9 billion, down 6% in a year.

Administrators help bank mutual fund businesses hum by taking care of such technology-intensive tasks as fund accounting, record keeping, and compliance. Most also double as distributors, helping banks position and sell their funds.

The fund administration business has been consolidating rapidly in recent years in response to shrinking profit margins. Bank customers are driving harder bargains, and the pressure to make heavy capital investments has grown.

"The level of services demanded and the cost of providing them are increasing," said Burton Greenwald, a Philadelphia funds consultant. Fund administration is a scale game, he said, and survival hinges on having "enough mass to provide adequate revenue" on thin margins.

Bisys, a major bank-technology servicer, has built its mutual fund muscle through acquisitions, having bought administrators Winsbury Group and Concord Financial in recent years.

The company is now in the process of taking over the fund services business of Furman Selz, a New York brokerage firm that currently administers $15.5 billion in bank fund assets.

Mergers in banking have also benefited Bisys by adding assets at the expense of other vendors. …

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