Global Custody Services Market Overview
Custody Services Market Size was estimated at 3.35 (USD Billion) in 2022. The Custody Services Market Industry is expected to grow from 3.6(USD Billion) in 2023 to 6.9 (USD Billion) by 2032. The Custody Services Market CAGR (growth rate) is expected to be around 7.48% during the forecast period (2024 - 2032).
Key Custody Services Market Trends Highlighted
In the Custody Services Market, the continuous digitization of financial operations is driving demand for automated and efficient custody solutions. The growing focus on ESG and sustainability has also increased demand for custody services that can provide comprehensive reporting and analysis on these factors. Additionally, the rise of blockchain and cryptocurrencies is creating opportunities for custody services to expand their offerings into digital asset management. As institutional investors allocate a higher proportion of assets to emerging markets, there is a growing need for custody services with expertise in local regulations and market practices. The increasing regulatory complexity and compliance requirements have also led to a higher demand for specialized custody services that can help clients navigate these challenges.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Custody Services Market Drivers
Increasing Demand for Regulatory Compliance
The industry of Custody Services Market is witnessing a rise in demand as financial institutions face tighter regulation. The Dodd-Frank Wall Street Reform and Consumer Protection Act (USA) and MiFID II (EU) have made it mandatory for financial institutions to strengthen their risk management practices and secure clients’ assets.
Custody services play a critical role in meeting these regulatory obligations by providing secure asset custody, regulatory reporting, and compliance support. This increasing demand for regulatory compliance is expected to drive the growth of the Custody Services Market at a significant rate in the coming years.
Rise of Institutional Investors
The Custody Services Market is also being driven by the rise of institutional investors, such as pension funds, sovereign wealth funds, and insurance companies. These institutional investors are increasingly seeking professional custody services to manage their growing portfolios and meet their complex investment needs. Custody services offer a range of benefits to institutional investors, including secure asset custody, risk management, performance monitoring, and reporting.The growing number of institutional investors and their increasing reliance on custody services are expected to contribute significantly to the growth of the Custody Services Market.
Technological Advancements
Apart from these trends, technological advancement is important in regards to Custody Services Market. The adoption of cloud computing, artificial intelligence and blockchain technologies reshape the provision of custody services. Increasingly, cloud computing proves to be of great advantage to custody service providers due to scalability, cost and flexibility. Artificial intelligence and machine learning technologies are applied in different areas, such as automated manager data, better risk management and investment profiling.Finally, blockchain technology is being explored to be used in record-keeping and settlement due to its transparency, security and efficiency.
Custody Services Market Segment Insights:
Custody Services Market Asset Class Insights
The Custody Services Market segmentation by Asset Class showcases diverse market dynamics and growth opportunities. Equities, Fixed Income, Commodities, and Alternative Investments are the key asset classes in this market. Equities, representing publicly traded stocks of companies, accounted for a significant market share in 2023 and are projected to maintain their dominance throughout the forecast period. The growth in equity markets, driven by factors such as rising investor confidence and increased participation, is expected to fuel the demand for custody services for equities.Fixed Income, encompassing bonds and other debt instruments, is another important asset class in the Custody Services Market. With a substantial market share, Fixed Income is expected to experience steady growth over the coming years.
The increasing issuance of corporate and government bonds, coupled with the search for yield in a low-interest-rate environment, is contributing to the growth of this segment. Commodities, including precious metals, energy, and agricultural products, represent a growing asset class in the Custody Services Market.The rising demand for commodities as an inflation hedge and diversification tool is driving the growth of this segment. The increasing complexity of commodity trading and the need for specialized custody solutions are further propelling the market growth. Alternative Investments, such as hedge funds, private equity, and real estate, are gaining traction in the Custody Services Market. The growing sophistication of investors and the search for alternative sources of return are fueling the demand for custody services for these complex and often illiquid assets.
The increasing regulatory focus on alternative investments is also creating opportunities for specialized custody providers. Overall, the Custody Services Market segmentation by Asset Class reflects the diverse needs of investors and the evolving market landscape. The growth of Equities, Fixed Income, Commodities, and Alternative Investments is expected to drive the overall market expansion in the coming years.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Custody Services Market Custody Type Insights
The Custody Services Market segmentation by Custody Type comprises Physical Custody, Virtual Custody, and Sub-Custody. Physical Custody held the largest market share in 2022, and it is expected to continue its dominance during the forecast period. The increasing demand for secure and reliable storage of physical assets is driving the growth of this segment. Virtual Custody is projected to witness the highest CAGR during the forecast period.
The rising adoption of digital assets and the growing need for efficient management of these assets are contributing to the growth of this segment.Sub-Custody is expected to account for a significant share of the Custody Services Market revenue by 2032. The increasing demand for outsourced custody services from institutional investors and asset managers is driving the growth of this segment.
Custody Services Market Custodian Type Insights
The Custody Services Market is segmented by Custodian Type into Bank Custodians, Non-Bank Custodians, and Independent Custodians. Among these, Bank Custodians held the largest market share in 2023, accounting for over 65% of the Custody Services Market revenue. This dominance is attributed to the extensive branch networks, long-standing relationships with clients, and robust infrastructure of banks.
Non-bank custodians, on the other hand, are gaining traction due to their specialized services, such as customized solutions and technology-driven platforms.Independent Custodians, while having a smaller market share, offer unique advantages such as objectivity and independence, making them attractive to certain segments of the market. As the Custody Services Market continues to grow, all three types of custodians are expected to benefit from the increasing demand for the safekeeping and administration of assets.
Custody Services Market End Client Type Insights
The End Client Type segment of the Custody Services Market is categorized into Institutional Investors, Retail Investors, and Family Offices. Institutional Investors, which include pension funds, insurance companies, and asset managers, are the primary drivers of market growth, accounting for the majority of Custody Services Market revenue. Their increasing demand for risk management, regulatory compliance, and enhanced investment performance is fueling the growth of this segment. Retail Investors, comprising individuals and smaller investment firms, are also contributing to market growth due to their growing wealth and participation in financial markets.
Family Offices, which manage the investments of high-net-worth individuals and families, represent a growing segment as they seek tailored custody solutions for their complex financial needs. The Custody Services Market segmentation provides insights into the varying requirements and preferences of these end-client types, enabling market players to develop targeted strategies and offerings to meet their specific needs.
Custody Services Market Service Type Insights
The Service Type segment is a crucial aspect of the Custody Services Market, offering a range of specialized services to meet the diverse needs of institutional investors. Among the key service types, 'Safekeeping' is expected to dominate the market share, driven by the increasing demand for secure storage and management of assets. In 2023, the Safekeeping segment is projected to account for over 40% of the Custody Services Market revenue. 'Settlement' services play a vital role in ensuring timely and efficient transaction processing, leading to its significant market presence.
'Proxy Voting' is another important service type, enabling institutional investors to exercise their voting rights and influence corporate decision-making, contributing to the overall growth of the Custody Services Market. 'Corporate Actions Processing' involves handling corporate events such as dividend payments, stock splits, and mergers, adding value to the services offered by custodians. This service type is estimated to grow at a steady pace, driven by the increasing complexity of corporate actions and the need for efficient processing.
Custody Services Market Regional Insights
The regional segmentation of the Custody Services Market offers valuable insights into the diverse market dynamics across different regions. North America dominates the market, accounting for over 38% of the global revenue in 2023. The region's strong financial infrastructure, coupled with the presence of leading financial institutions and asset managers, drives its dominance. Europe follows closely with a market share of approximately 30%, supported by a robust banking sector and a high concentration of wealth management firms.
APAC is projected to exhibit the highest growth rate during the forecast period, owing to the region's rapidly developing economies and increasing demand for custody services from institutional investors.South America and MEA represent emerging markets with significant growth potential, as they witness an influx of foreign investments and a growing middle class seeking wealth management solutions. By understanding the regional nuances and growth prospects, market players can tailor their strategies to capitalize on specific opportunities in each region.
Source: Primary Research, Secondary Research, MRFR Database and Analyst Review
Custody Services Market Key Players And Competitive Insights:
Major players in Custody Services Market continue to invest heavily in technology and innovation to maintain their competitive edge. Leading Custody Services Market players such as State Street, BNY Mellon, and J.P. Morgan are focusing on developing integrated solutions that offer a comprehensive suite of custody services tailored to the specific needs of their clients. These solutions typically include asset servicing, fund accounting, and performance measurement capabilities.State Street, a leading provider of custody services, has recently launched a new platform called "Infinity" that offers a range of innovative features, including real-time data analytics, risk management tools, and enhanced reporting capabilities.
The platform is designed to provide clients with a comprehensive view of their assets and investments, enabling them to make informed decisions and manage their portfolios more effectively.BNY Mellon, another major player in the Custody Services Market industry, has also been investing heavily in technology. The company has recently introduced a new solution called "HyperConnect" that leverages artificial intelligence (AI) and machine learning (ML) technologies to automate and streamline custody operations. The solution is designed to reduce operational costs, improve efficiency, and enhance the client experience.
Key Companies in the Custody Services Market Include:
- Société Générale S.A.
- P. Morgan Chase Co.
- Morgan Stanley
- UBS Group AG
- Goldman Sachs Group, Inc.
- Deutsche Bank AG
- State Street Corporation
- The Bank of New York Mellon Corporation
- SS Technologies Holdings, Inc.
- Citigroup Inc.
- HSBC Holdings plc
- Credit Suisse Group AG
- BNP Paribas S.A.
- Northern Trust Corporation
Custody Services Industry Developments
The Custody Services Market is projected to grow from USD 3.6 billion in 2023 to USD 6.9 billion by 2032, exhibiting a CAGR of 7.48% during the forecast period (2024-2032). The growth of the market is attributed to increasing demand for the safekeeping and administration of financial assets, rising regulatory compliance requirements, and technological advancements such as blockchain and artificial intelligence. Recent news developments include the acquisition of BNY Mellon's Pershing by Global Payments for $7.6 billion, the launch of a new custody platform by Northern Trust, and the partnership between State Street and Fireblocks to provide digital asset custody services. Key players in the market include BNY Mellon, State Street, Northern Trust, Citi, and J.P. Morgan.
Custody Services Market Segmentation Insights
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Custody Services Market Asset Class Outlook
- Equities
- Fixed Income
- Commodities
- Alternative Investments
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Custody Services Market Custody Type Outlook
- Physical Custody
- Virtual Custody
- Sub-Custody
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Custody Services Market Custodian Type Outlook
- Bank Custodians
- Non-Bank Custodians
- Independent Custodians
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Custody Services Market End Client Type Outlook
- Institutional Investors
- Retail Investors
- Family Offices
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Custody Services Market Service Type Outlook
- Safekeeping
- Settlement
- Proxy Voting
- Corporate Actions Processing
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Custody Services Market Regional Outlook
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North America
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Europe
-
South America
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Asia Pacific
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Middle East and Africa
| Report Attribute/Metric |
Details |
| Market Size 2022 |
3.35(USD Billion) |
| Market Size 2023 |
3.6(USD Billion) |
| Market Size 2032 |
6.9(USD Billion) |
| Compound Annual Growth Rate (CAGR) |
7.48% (2024 - 2032) |
| Report Coverage |
Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
| Base Year |
2023 |
| Market Forecast Period |
2024 - 2032 |
| Historical Data |
2019 - 2023 |
| Market Forecast Units |
USD Billion |
| Key Companies Profiled |
Société Générale S.A., J.P. Morgan Chase Co., Morgan Stanley, UBS Group AG, Goldman Sachs Group, Inc., Deutsche Bank AG, State Street Corporation, The Bank of New York Mellon Corporation, SS Technologies Holdings, Inc., Citigroup Inc., HSBC Holdings plc, Credit Suisse Group AG, BNP Paribas S.A., Northern Trust Corporation |
| Segments Covered |
Asset Class, Custody Type, Custodian Type, End Client Type, Service Type, Regional |
| Key Market Opportunities |
Digital TransformationExpansion into Emerging MarketsOutsourcing of Custody FunctionsESG-Focused Custody ServicesGrowth in Private Assets |
| Key Market Dynamics |
Rising demand for outsourcing of custody operations Growing adoption of technology for efficiency Increasing regulatory pressure Expansion into emerging markets Focus on ESG and sustainability. |
| Countries Covered |
North America, Europe, APAC, South America, MEA |
Frequently Asked Questions (FAQ) :
The Custody Services Market was valued at USD 3.6 billion in 2023 and is expected to grow to USD 6.9 billion by 2032, at a CAGR of 7.48% over the forecast period.
North America, Europe, Asia Pacific, and Rest of the World are the key regions in the Custody Services Market.
The major applications of custody services include safekeeping of assets, transaction settlement, income collection and distribution, and regulatory compliance.
The key competitors in the Custody Services Market include BNY Mellon, State Street Corporation, The Bank of New York Mellon Corporation, Northern Trust Corporation, and Citigroup Inc.
The growth of the Custody Services Market is driven by factors such as the increasing demand for regulatory compliance, the growing need for safekeeping of assets, and the rising complexity of global financial markets.
The Custody Services Market faces challenges such as the increasing competition from fintech companies, the rising cost of compliance, and geopolitical risks.
The future trends in the Custody Services Market include the adoption of new technologies, such as blockchain and artificial intelligence, the increasing demand for ESG-compliant custody services, and the growing importance of data analytics.
The COVID-19 pandemic had a significant impact on the Custody Services Market, leading to a decline in market growth in 2020. However, the market is expected to recover and grow in the coming years.
The Custody Services Market is subject to a number of regulatory factors, including the Bank Secrecy Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the European Union's Markets in Financial Instruments Directive.
The key opportunities in the Custody Services Market include the growing demand for outsourced custody services, the increasing adoption of new technologies, and the expanding global footprint of financial institutions.
