Adapting Custody Services for Modern Asset Managers

This technical report discusses the evolving role of custodian banks in the investment industry, particularly in relation to modern asset managers and asset owners. It outlines the historical context of custodians, who have traditionally safeguarded assets and provided administrative services. As asset managers adopt more sophisticated investment strategies, the demand for enhanced services from custodians is increasing. The report details the four phases of outsourcing within the asset management industry, emphasizing a shift from reliance on people and processes to a focus on technology and data. It highlights the challenges custodians face in meeting the expectations of asset managers regarding data management services. The report concludes that custodians must fundamentally rethink their operational mindsets and service offerings to remain relevant and competitive in the changing landscape of asset management. The need for custodians to adapt and embrace flexibility is underscored as a critical factor for success in this evolving environment.