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2023 has presented a number of challenges for Asset Servicing firms. They've been faced with declining revenues and evolving customer loyalty and have also had to adapt to the changing landscape of work and business environments in a post-pandemic world. In this blog, we'll explore the key challenges facing asset servicing firms in 2024 and provide insights into how these firms can retain clients and empower their employees to navigate the shifting business landscape.
Challenges in the asset servicing industry
Throughout 2023, asset servicing firms have experienced revenue pressures, pushing them to seek innovative strategies to bolster their financial outlook. To grow their revenues, some firms, particularly those with a global footprint, have looked to strengthen their front-office capabilities, often through strategic acquisitions. This shift towards integrating front-office functions has enhanced their client offering and created a more comprehensive service.
Embracing digital assets custody
In the ever-evolving world of finance, digital assets custody has emerged as a promising avenue for growth. Recent incidents involving the collapse of cryptocurrency exchanges have underscored the importance of regulated crypto custodians. Asset servicing firms can tap into this opportunity by offering secure and regulated custody solutions for digital assets, providing a valuable service to investors looking to enter the digital asset space.
Transition to T+1 settlement
The move towards T+1 settlement has presented a significant challenge and opportunity for asset servicing firms. To navigate this transition successfully, firms have been forced to prioritise automation to achieve straight-through processing efficiencies. This automation can significantly reduce trade exceptions and lower the rate of settlement fails, ultimately saving time and resources.
Retaining client loyalty through personalisation and unique data insights
In recent years, asset servicing firms have witnessed a decline in client loyalty, with customers more prone to switching service providers and so, to address this challenge, organisations have had to find new ways to strengthen customer relationships allowing them to empower and retain their clients. The aim has been to create personalised offerings which demonstrate long-term value.
However, old systems have often hindered the ability of an organisation to produce tailored customer experiences. In order to overcome this, leaders across all business units must collaborate with technology teams to share data and insights. This data, used alongside emerging technologies, can then develop modelling tools that generate predictive insights that enhance risk, compliance, and operational tasks. By doing this the customer experience will be improved and firms will be able to demonstrate the value of a long-term relationship.
Navigating the new work and business environment
The post-pandemic world has seen a profound shift in employee expectations and work environments. Employees now expect more flexibility and work-life balance, with a significant portion working remotely for multiple days each week. However, this shift has led to disconnection within teams and a decline in workplace culture.
To succeed in this new environment, leaders must work on rebuilding team cohesion even in remote settings. They must collaborate with HR partners to reinvent the employee value proposition (EVP) and foster a more human-centric culture. This approach can unlock the full potential of the workforce, driving innovation and productivity.
The asset servicing industry in 2024 faces both challenges and opportunities. To thrive, firms must adapt to changing customer preferences, embrace digital assets, and navigate the transition to T+1 settlement. Furthermore, nurturing client loyalty and empowering employees to thrive in a changing work environment will be crucial to their long-term success. Leaders in the financial services sector should be prepared to innovate, collaborate, and adapt to these evolving dynamics to stay competitive and provide exceptional value to their clients.
Watch our Hot Tips & Insights video series discussing these points, in our video library.
Thank you for reading, and please reach out to me here if you need or want any further advice on this subject – always happy to continue the conversation.
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