GLOBAL - The market opportunity for business process outsourcing (BPO) in European asset management will reach US$758m (e623m)by 2006, according to a new report by Datamonitor.
The report, Asset management technology in Europe, claims the market has emerged in Europe as a series of large-scale lift-out deals, with traditional custodians demonstrating interest in taking over entire back-office operations of asset managers.
The market analsyst lists State Street, Bank of New York, Mellon, JP Morgan, Citigroup and HSBC as custodians keen to move take on back-office operations.
In a release, Datamonitor said the move would see the market for software vendors targeting asset managers directly gradually erode.
“At the same time, however, BPO providers represent a new addressable market for software vendors that offer highest scalability, breadth and depth of functionality,” the independent market analyst said.
Daniel Lessner (pictured), Datamonitor financial services technology analyst and author of the report said: “The sudden emergence of large-scale BPO deals in asset management is as much a result of custodians aggressively pushing the market into this direction as it is a result of mere demand from the asset management community.
“The fact that banks need to expand their custody business to evolve into a wider BPO offering has ‘un-naturally’ accelerated the development of this young market, literally leaving other BPO providers to stand and watch as it has unfolded.”
Datamonitor questioned the ability of custodians who are thirsty for a slice of the new market to catch up with the developments of the past one to three years and enter the market with stand-alone offerings but suggested a partnership between custodians and BPO providers from a technology background, with the combination of expertise and experience, would prove a viable option.
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