Custody Services Accelerate with Technology

By Giarraputo, Joseph | Global Finance, July 2001 | Go to article overview

Custody Services Accelerate with Technology


Giarraputo, Joseph, Global Finance


-GLOBAL CUSTODY

ROUND TABLE

International leaders in custody services discuss the future of the increasingly global and technologically accelerated industry. Global Finance publisher Joseph Giarraputo moderates.

GLOBAL FINANCE: What are the developments we may expect to see in the global custody environment?

Joseph C. Antonellis, executive vice president, State Street: Clients will be focusing on their core competencies and outsourcing other functions. Large custodians that want to remain in the business must continue to invest in technology because customers considering outsourcing are looking for single-platform, consistent service worldwide. Custodians need to focus on the entire marketplace and on integrated solutions. Clients want immediacy of transactions and data flow, and they want their provider to deal with any large-scale industry changes so they can focus on investment.

George F. Evans, senior vice president, JP Morgan: The next step for custodians is middle-office servicing-supporting third-party, institutional, and private clients, and handling third-party information providers or counter parties. Our role could change from asset servicing to everything post-trade. It's about partnering and helping clients execute their business strategies.

Robert Heitsenrether, vice president, Citibank: We see a growing trend among investor clients to assess each element in the investment cycle for strategic fit. It is a logical development for focused custody organizations to leverage their processing expertise to move further into the value chain, from traditional back-office functions to everything post-trade.

Steven L Fradkin, senior vice president, Northern Trust: Custody is now really three businesses: securities processing; information services to empower underlying investors; and asset management in terms of foreign exchange, securities lending, or cash management.

Anthony T. Riker, vice president, Bank of Bermuda: When you're in partnership with your asset managers in providing fund administration, the logical extension is to provide other services. Global custody is a natural by-product to provide. In combining the two, global custody is becoming more about information management.

Kevin P. Galvin, vice president, Union Bank of California: There's a significant appetite among clients for this kind of partnership. Regional banks, for example, want to be able to deliver very sophisticated products. Custodians can help them do this.

Kevin R. Smith, senior vice president, Bank of New York: In the past 24 months outsourcing has accelerated. One option for asset managers is to work with an organization such as Encompys, which combines the knowledge and resources of leading technology and financial services organizations to offer a fully integrated end-to-end STP outsourcing solution.

Andrew J.F. Tucker, partner, Brown Brothers Harriman: Regulatory and industry-led initiatives mean investment managers are looking for people who can provide solutions.We'll see global custodians begin to focus on narrower market segments because the requirements of each segment will become much deeper.

Jose RL Urrestarazu, senior vice president, Banco Santander Central Hispano: Some five years ago we implemented outsourcing in Spain, and now we're exporting this service to our banks in Latin America, where we see a growing interest in local and foreign players.

GF: What technology and Internet-related developments should custodians be aware of?

GALVIN: Pressure is increasing for technology to be open-ended because clients need to receive and disseminate data between their custodian and a variety of platforms. By the same token we have to customize the feeds we're sending out.The challenge is providing security and flexibility.

FRADKIN: There are three areas of need on the technology front.The first is industry need: Many key initiatives such as T- 1 and GSTP require technological solutions. …

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