A custodian bank is a financial institution that holds assets – either real or digital – to prevent them from being stolen or lost. The depositary may hold shares or other assets in an electronic or physical format. As they are responsible for the safety of assets and securities worth hundreds of millions or even billions of dollars, custodians tend to be large and reputable companies with a highly secure infrastructure. How does a custodian work? Investment consultancy firms generally use custodians to protect the activities they manage on behalf of their clients. Most custodians provide correlated services, like account management, transaction settlement, collection of dividends and interest payments, tax support, foreign exchange management and digital key custody. A custodian may have the right to enforce the possession of assets if necessary, often in conjunction with a power of attorney. This allows the custodian to carry out actions on behalf of the client, like making payments or modifying investments. The US keeps going Some of the largest depositary banks in the United States include BNY Mellon, JPMorgan Chase, State Street Bank and Trust Co., and Citigroup. In other countries, some of the most renowned custodians are Bank of China (Hong Kong), Credit Suisse and UBS (Switzerland), Deutsche Bank (Germany), Barclays (UK) and BNP Paribas (France). And what about Italy? Well, Italy seems to be lagging behind a bit (too much?) in this sector. This is a gap that, despite the fact that the global custodian services market is expected to drop from 66.1bn dollars in 2019 to 64.27bn in 2020, might never be bridged if we keep waiting without taking action in this sense. Indeed, this drop is mainly due to the economic slowdown in countries because of the Coronavirus pandemic and the measures to contain it. The market is therefore expected to pick up and reach 80.96bn dollars in 2023.
The custodian market The custody services market is made up of the revenues generated by the services provided by a custodian to investors. The custody service generally comprises activities such as the custody and service of an investor’s assets – whether they are real or digital. The services provided by a depositary bank include transaction and settlement, custody and the registration of negotiable assets and cash to clients. In 2019, North America was the largest region in the custody services market and Asia-Pacific is expected to be the fastest-growing region in the near future. A highly competitive market and an automated future Growing competition is a key factor hindering the growth of the custody services market. The custody services market is highly competitive, with a number of banks providing custody services along with other banking services on a global, regional or local scale. Namely, competition on prices is putting enormous pressure on banks in the global market. Automation and standardisation are key factors driving the growth of the custody services market for real and digital assets. The custody services sector is focusing on the use of technology to improve its efficiency. The automation and standardisation of core custodian services and operations result in increased visibility, greater productivity through operational efficiency and lower costs for clients. They also improve the quality of service and enable a custodian to quickly react to future needs. Due to the automation and standardisation of custody services, in coming years the asset-centred model is expected to be expanded via an open-platform approach focusing more on data, where a custodian will have access to a variety of available services: from assets to keys and then data and log-ins. Hokan and Scytale can provide a custody solution for any digital asset that is highly secure thanks to the TSS protocol and PSD2 strong authentication. Said features, security and standardisation, are expected to drive the growth of the custody services market. And lead Italy as well to use new technologies.BitcoinCryptocustodianRegtech