The biggest challenge for the agent bank industry over the next five years is regulation, according to results from the Societe Generale Securities Services Independent Market Survey conducted at the annual Network Management Forum in Vienna.
The 214 survey respondents included 28 percent sub-custodians, 20 percent global custodian banks and 16 percent from market infrastructure organisations.
Other challenges that participants selected were technology-based disruptors at 25 percent, costs of capital and liquidity at 15 percent, market infrastructures as competitors at 13 percent and market weakness at 2 percent.
Survey participants were also asked what topics they have focused more on RFP questionnaires in the last two years.
On top, at 35 percent was asset protection. This was followed by 27 percent of respondents selecting cybersecurity. Some 21 percent said data protection was a focus, while 9 percent said digitalisation. Finally, 7 percent voted for corporate social responsibility.
When looking at how many organisations will be providing a full range of traditional agent bank services in the next five years, 75 percent of survey respondents said they thought there would be less providers, while only 10 percent thought there would be more. At 8 percent, participants thought there were be no change, and an even smaller 7 percent said they think there will be new entrants.
The survey also asked to what extent did participants agree that agent bank services will be unbundled and supplied on a modular basis in the next five years.
Just under half, 47 percent, somewhat agreed, followed closely by 36 percent strongly agreeing. A much lower figure of 13 percent neither agreed nor disagreed, while 5 percent disagreed.
Moving on to T2S, the survey as participants what they had observed over the last three years. Some 44 percent stated they had seen no harmonisation, no market consolidation, no better liquidity and no lowering of costs. However, 32 percent noted that they have seen more harmonisation, 12 percent suggested there has been more consolidation, 10 percent believe there has been better liquidity and finally 4 percent have seen lower costs.
Focusing on the biggest disruptors, survey responses showed that technology and regulation come out on top, while the inability to compete was less of a concern.
Commenting on the survey, Andrew Duffin, head of sales and relationship management, UK at SGSS, said: “It is not surprising that regulation, asset and data protection all featured prominently in the results. An increased focus upon cybersecurity also scored highly and this matches perfectly what we are experiencing with our clients."
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