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Dispatches from the front: Asset service providers win some, lose some
Evolving client requirements, market trends see shifting fortunes in the industry
The Asset 9 May 2024

The year 2023 was an eventful and exciting one for the asset servicing industry as service providers saw business volumes and revenues increase despite the relatively flat growth in assets.

Unfortunately, many of the developments in this space are not in the public domain and hence specific names of service providers and mandates are not disclosed in this article, but we hope it can still offer some insights into specific activities that happened in particular markets during the review period for the Asset Servicing Awards 2024.

Asean

In the Asean region, client requirements are changing as reflected in the new mandates awarded to the asset service providers. There is a pronounced trend towards increasing requirement for digitalization and demand for more technology-focused services.

In the Philippines, the digitalization trend has seen one key client moving its fund administration requirements involving more than 50 funds, which it used to do in-house, to a third-party service provider who has a track record for faster turnaround time and a higher level of automation.

The rapid growth of digital economy in Singapore has also resulted in clients switching service providers for fund administration in response to the requirements of newly launched digital economy funds.

There has also been a major switch by a global custody client from its long-time incumbent to another service provider who has been winning mandates away from competitors.

In Malaysia, a well-established foreign service provider snatched a major subcustody mandate from a domestic player despite the special relationships between the client and its original provider. The mandate which comes with US$2.5 billion in assets under custody saw the incoming provider’s AUC grow by 8% on this mandate alone.

India

In India, there is increasingly intense competition in the subcustody space with one client moving back a portion of its assets to the original service provider.

One service provider also grabbed a sizeable insurance mandate from the incumbent service provider. This mandate required the winning service provider to provide subcustody services to entities in about 10 states across India, demonstrating the growing requirements of the client which the original service provider could not provide.

Another service provider won mandates to service four new alternative funds, an indication of the rapid growth of alternatives investing in this market.

The same service provider won a major mandate in fund administration that saw its assets under administration grow by 30% in 2023.

Middle East

In Oman, a long-standing service provider decided to exit the market, resulting in its major competitor winning 90% of the mandates and achieving a 60% growth in AUC. The exit, however, was temporary and the old service provider re-established its presence in the market but focused on corporate finance.

In the United Arab Emirates, the expansion of the IPO market has generated strong growth for asset service providers operating in the market.

Asset service providers in Saudi Arabia were also enjoying robust growth as investors and asset managers switched from mutual funds to money market funds.

Related article: Asset Servicing Awards 2024: Bumper year amid capital market slowdown

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