Asset servicing is undergoing a major transformation as technology becomes an increasingly important aspect of the industry. Competition, regulations, changing expectations for meaningful work and profitability are driving this shift. Based on extensive research and interviews with asset servicing industry experts, we’ve identified the six key trends set to shape the asset servicing landscape in 2023 and beyond.
#1: The rise of regulatory pressure in a growing market
The global asset servicing market is expected to grow 10.2% in 2023, reaching 1.27 trillion dollars, according to a report by The Business Research Company. However, the growth is limited by the regulatory landscape and a lack of digitalisation. Companies that successfully navigate these challenges will share half a trillion dollars in growth over the next five years.
Regulatory compliance technology is crucial for companies looking to minimise risks, reduce mistakes and fines, increase efficiency and profitability, and protect their reputation. With the help of technology, manual and repetitive tasks can be automated, freeing up staff to focus on more meaningful work and improving their satisfaction and engagement.
#2: Stop Excel-ing
Despite technological progress, a staggering 40% of the asset servicing industry still relies on Excel as their main tool.
For decades, Excel has been the go-to tool for asset servicing professionals. However, as the industry has grown and become more complex, Excel is no longer the best choice because it is not designed to handle large amounts of data and needs to be better suited for complex calculations.
Fortunately, there are now better options for asset servicing professionals. New solutions are designed to handle large amounts of data, complex calculations and industry-specific tasks, such as portfolio oversight, safekeeping, and cash flow monitoring. They are more secure, efficient and accurate than Excel, and they can save time and money.
It’s time to embrace advanced technology solutions that offer increased efficiency and cost savings of up to 82% and 40%, respectively, based on Depowise customers’ experience.
#3: Embracing digitalisation
The push towards digitalisation is driving asset servicing companies to find solutions for digitising their data sets, from document acquisition to data storage. The challenge lies in finding the right partner, investing in the technology, and successfully implementing it.
In many cases described by market participants, internal development is slow and complicated due to the complexity of cooperation between the IT department and asset servicing experts. According to Depowise’s experience, internal development takes at least three times more time than a ready-made solution. The external partners offer a quicker and more flexible option tailored to the company’s specific needs.
In the safekeeping area alone, 65% of processes need to be digitalised. Starting from the digital collection of documents and property proofs, followed by ownership verification reconciliation, dashboards for management reporting and missing documents monitoring, asset register view daily updates, document storage and the cash transactions history.
Digitalising all these processes will result in an enormous return on investment and makes the business scalable.
#4: Automation is a must
In the coming years, automation is becoming increasingly important in asset servicing. It can help reduce costs, improve accuracy, and increase efficiency.
Despite the progress made, 70% of oversight and 50% of cash flow actions still need to be automated, finds Depowise study. The less-automated parts are the due diligence on funds’ delegates and reconciliation of cash and AIFM positions. The most automated functions today are day-by-day asset register view and cash transaction history. Still, there is a trend emerging that in the areas where more tech solutions are available, asset servicing companies are keen to implement them. However, there is still much work to be done to automate these processes and improve efficiency.
#5: Simplifying integration
With multiple FinTech solutions available, asset servicers often find themselves using multiple automation tools for their core activities, leading to inefficiencies and a loss of time. The market demands a one-stop solution that integrates all necessary operations for oversight, safekeeping, and transactions. Depowise has developed such a solution, bringing all the automation modules under one roof. From oversight to reporting, all the modules are integrated.
#6: The age of Artificial Intelligence
70% of market participants believe that AI could add value to their businesses, and its use is growing in the asset servicing sector. AI can help automate manual processes, improve decision-making, and increase efficiency and profitability. As AI technology continues to evolve, it will play an increasingly important role in the asset servicing industry.
As a FinTech, Depowise is obviously one step ahead here, using both machine learning and artificial intelligence skills and making customers’ journey as smooth and advanced as possible.
Exciting year ahead
The asset servicing industry is rapidly evolving, and in order to stay competitive, companies must embrace the emerging trends of digitalisation, integration, automation, innovation and artificial intelligence. In 2023, these trends will be essential for success in the industry.
Stay ahead of the game and embrace these emerging trends to ensure your success. In case you need some help, feel free to request a demo here.