Co-creating with clients
As the industry’s first and only true front-to-back office service provider, State Street prides itself on co-creating solutions with its clients.
Leveraging its 230-year history, the company offers institutional investors in Asia Pacific a combination of innovative global solutions and local market expertise, alongside access to cutting-edge technology.
“Our global presence gives clients in the region access to industry best practice in asset servicing. While our in-country expertise across the region enables us to understand the nuances of each local market, its regulatory requirements and potential barriers to entry,” Neil Macdonald, head of asset managers segment in Asia Pacific at State Street, says.
Asset managers in Asia Pacific are faced with a growing market that is not dominated by global giants. As a result, they require scalable enterprise technologies, as they move into new product categories, such as ETFs, and explore new markets, with all the associated regulatory and language issues that involves.
Meanwhile, they face similar challenges to their counterparts in other regions, including pressure on fees, spiraling demands for technology spend, a need to access and integrate new data sets, and increasing regulatory demands.
Against this backdrop, many are opting to use a partner to deliver their trading and investment infrastructure needs. “Our front-to-back office solution allows our clients to focus on investing and investors, while we take care of the operations. As they grow, we provide them operating leverage and deliver an operating expense figure significantly below what they could achieve in-house,” Macdonald explains.
Ongoing innovation
State Street, which was named Best Middle and Back Office Provider and Best Global Custodian (25 Years) in Asia Asset Management’s Best of the Best 2022 Awards, is continuing to innovate as managers in APAC look to outsource more elements of their operating model. Its acquisition of Brown Brothers & Harriman Investor Services will further bolster its investment servicing capabilities.
In the past 12 months, it has worked with a client in Malaysia to develop an outsourced model for its middle office, while in Australia it has developed bespoke operating models to support semi-transparent active ETFs and dual listed ETFs. It has also developed a model to support cryptocurrency ETFs that was recently approved by regulators in Australia and Singapore.
State Street, which had a record US$2.7 trillion in assets under custody and administration in APAC as of December 31, 2021, is also supporting clients in the region as they respond to growing demand for ESG investments.
“Our ESG risk analytics and regulatory reporting capabilities cover the entire gamut of Task Force on Climate-related Financial Disclosures, Sustainable Finance Disclosure Regulation, along with climate-stress testing and scenario analysis,” Macdonald says.
In response to the growth in private asset markets in APAC, State Street recently launched State Street AlphaSM for Private Markets, a platform to manage the entire lifecycle of clients’ alternative investments.
Its acquisition of Mercatus, a premier front and middle-office solutions and data management provider for private market managers in July last year, further complements its core fund administration and middle office capabilities, enabling it to help clients manage deal flow and deal analytics, as well as providing portfolio managers with a single portfolio view across public and private markets.
Meanwhile, the company recently launched State Street Digital, which focuses on crypto, central bank digital currencies, blockchain and tokenisation, to cater to the growing demand from clients to service digital assets. It is also in the process of developing a digital custody capability through its partnership with fintech firm Copper.co, which is scheduled to be launched later this year.
“Our vision is to be able to offer clients a state-of-the-art safe, scalable, and evolving solution to safekeep digital assets, whilst also offering access to liquidity pools and revenue enhancing strategies catering for specific market structures,” Macdonald explains.
To ensure it offers innovative solutions, State Street continues to invest in technology. For example it has ploughed $80 million into investment management solutions firm Charles River since acquiring it in 2018. It also builds partnerships with leading providers, such as Microsoft Azure, Snowflake, Lucca and Copper.co.
Macdonald says: “To make the promise of front-to-back partnership a reality, we know we need to invest in the best technology, recognise we cannot do it all ourselves, and be a ‘different State Street’ for our clients, understanding what it means to be a strategic partner for chief investment officers, portfolio managers, traders and CEOs.”