NETHERLANDS – Dutch custodian Kas Bank intends to launch a custody platform pension funds and multiple major asset managers and pension-delivery organisations in the Netherlands may subscribe to, according to chief executive Albert Röell.
Over the last five years, the traditional custody role has changed drastically from staid and stuffy safekeeping to high-tech data management.
Kas Bank sees a golden – or rather, an orange – opportunity in a platform that delivers information and risk management, among other services, to a wide range of service providers.
The custodian said it aimed to launch an “orange” custody platform, referring to the Dutch national colour.
Major managers in the Dutch market include BlackRock, APG, PGGM and MN.
Röell said: “If we pull together now, we can launch a national custody platform that has international appeal. There is no reason we shouldn’t be able to make this concept work.”
Such a platform would capitalise on custodians’ new role as information management hub.
Like a spider in the intricate web of investment information, custodians sit right at the centre, where all the various strands of data concerning trades, currency positions, derivatives and related reporting converge.
“You have to realise an average Dutch pension fund employs between six and 10 asset managers,” Röell said.
“Each of these managers has been afforded a certain margin for strategic decision-making. But if you have eight mandates, and all of them are being implemented a bit to the left, on a higher level, things will run off track.
“So it is important to have the necessary software in place that will provide continuous look-through insight into what is happening, both on the level of individual mandates and one level up.
“If at any point in time our ‘dashboard’ for a particular client reveals a movement that diverges from the client’s investment strategy, we have the ability to automatically correct this, provided the client has authorised us to do so.”
This way, “custody 2.0” can help trustee boards to meet evermore stringent requirements of being “in control” at all times, Röell suggested.
He said these recent developments in the custody business were part of a broader trend of unbundling of services and fees in the financial industry, and that this trend would continue.
“This will fundamentally change the financial services industry,” he said.
“In the past, each individual financial institution used to offer a full range of services, but now you see all manner of generic services being peeled off.
“Those services are no longer offered by individual providers but instead are delivered by a platform that transcends individual institutions.”
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