Growth of tokenised assets is transforming the investment services industry, fostering strategic partnerships between traditional custodian banks and technology firms, according to a senior executive at State Street Corporation.
Figures from Deutsche Bank show that global tokenised assets surged from US$4 billion in 2019 to $331 billion as of November last year.
Cuan Coulter, executive vice president and head of international at State Street, says asset managers have been actively tokenising money market funds in recent years and are likely to eventually tokenise every traditional asset class.
“It’s crucial for custodian banks to ensure their infrastructure is prepared for this trend in payment, clearing and settlement,” he says in an interview with Asia Asset Management.
He says the push to enhance artificial intelligence capabilities such as robotic process automation and machine learning within custodian banks is fueling mergers and acquisitions.
“It’s quite difficult to see major mergers among established players,” he says. “However, large financial institutions are actively seeking opportunities to acquire fintech firms. Conversely, we’ve seen some digitally native firms acquiring lenders in the US to gain banking licences.”
For State Street, he says acquisitions and strategic partnerships with local players are important to access untapped and underdeveloped market, underscored by the firm’s acquisition of Japan’s Mizuho Financial Group’s global custody and securities service businesses last October.
“Japan’s custody market is heavily dominated by local banks,” Coulter says. “The deal will enhance the firm’s penetration in the market by supporting the overseas investments of Mizuho’s Japanese clients.”
State Street is also exploring opportunities in the Middle East, particularly in Saudi Arabia, where he says the government is reforming the pension system and developing a comprehensive mutual fund market for a population where almost two-thirds are under the age of 40.
According to Coulter, State Street decided about a year ago to establish local custody business in Saudi Arabia, and may launch it within a year depending on market competitiveness.
Boston-based State Street had around $54 trillion of assets under custody and/or administration as of December 2025.
