BNY Mellon, which tops Institutional Investor’s ranking of the World’s Largest Global Custodians for a seventh consecutive year, closed a deal with Baltimore-based investment management firm T. Rowe Price in August that added $770 billion to the bank’s assets under administration. Just 12 months earlier, fourth-place Citi enjoyed an $866 billion boost in assets under custody by winning a contract with Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund.
These days, global custodians aren’t struggling to garner business. Since the 2008–’09 financial crisis, institutional investors around the world have placed a greater emphasis on risk management, data management and compliance with regulatory obligations that differ by geography and seem to grow in number and complexity each year. Global custodians are buckling down on their core strengths and innovating tools to better meet investors’ evolving demands.
Many are simplifying their technology and operating infrastructures to drive value for clients. “Managing data is a significant challenge that most large institutional investors face, exacerbated recently by the growth in data sources available,” explains Boston-based Scott FitzGerald, head of sector solutions for the Americas at No. 2 State Street Corp. He points to the bank’s cloud-based DataGX management system, which helps clients assess the flow of performance, risk and regulatory reporting data.
“Open-architecture technology products are becoming a key differentiating factor between custodians,” adds Paris-based Etienne Deniau, head of business development for asset managers & asset owners at Société Générale Securities Services, this year’s No. 10 firm. Clients are willing to pay a premium for services to boost transparency and ease of business, and integrate them into a superior operating environment, he notes.
Samir Pandiri, global CEO of asset servicing at BNY Mellon in New York, says that “it’s not about being everything; it’s about deciding what things are important to provide that our clients will benefit from.” To that end his firm is shifting its focus from chasing market share to deepening relationships with customers. The New York–based firm is phasing out the retail portion of its U.K. transfer agency business so that it can concentrate on the more popular institutional side. Similarly, Citi combined its custody business with financing and fund services last year.
Many global custodians saw their asset totals rise in local-currency terms but in the accompanying table appear to have declined year-over-year because of the strength of the dollar at the time the currency conversions were calculated.
