As many aspects of post-trade processing services have become increasingly commoditised over the years, custodians have come to seek differentiation in their ability to present front-office clients with various back-office data, and enable action on it.
Now, Global Custodian observes in detail how differently BNY Mellon and State Streets have approached the challenge.
Proprietary versus open
State Street is building on its 2.6 billion-dollar acquisition in 2017 of Charles River Development (CRD), a trading solutions and analytics provider, to provide its own service throughout the chain.
“Many thought the Boston-based custodian had massively overvalued the front-office software firm. However, the bank’s vision of combining the front-office with its fund accounting and custody services would open up a whole new world of revenues,” writes Global Custodian.
BNY Mellon, on the other hand, has gone for an open architecture strategy – partnering with order management systems BlackRock Aladdin, Bloomberg AIM and SimCorp, and connecting to a various fintech companies to convey new services. The aim, according to Global Custodian, is to provide near-real-time data and analytics to buy-side actors.
However, for both actors, the strategies have been met with a mixed response from the industry, Global Custodian notes, quoting industry seniors who present both pros and cons for each.