On 13th October, CACEIS in Italy sponsored and took part in FundsPeople’s first ever Italian custody event. FundsPeople is an online magazine that also runs a successful annual custody event in Spain. Giorgio Solcia, the Managing Director of CACEIS Bank, Italy Branch participated in a roundtable discussion along with representatives from several other major Italian custodians on the theme - The Evolution of the Depositary Bank.
As part of the FundsPeople’s event marketing campaign, Giorgio Solcia, and Head of Business Development, Elena Giordano, were interviewed for magazine’s printed editions in October and November. Below are some extracts from the two published articles.
Global scale, local business
In his interview, Giorgio Solcia highlighted the key factors driving the significant changes in the industry: player size, business efficiency, group synergies, and managed growth of international business expansion activities.
How should depositary banks tackle the difficult challenge of managing liquidity in a negative rate environment? There are two essential factors in meeting this challenge. The first is to ensure you have sufficient growth in volumes to be able to take advantage of economies of scale. CACEIS is definitely on the path towards greater business scale as evidenced by the recent agreement between Crédit Agricole and Santander Bank to combine their securities servicing divisions.
The second factor in meeting the challenge is leveraging technology to raise efficiency levels of IT systems and business processes. Robotics process automation (RPA) and Artificial Intelligence (AI) are key technologies here. Many players can no longer afford the costs of maintaining and updating IT systems, or those related to human errors on manual operations.
The first lockdown saw a marked decline in deposits and in the share of assets under custody, however, the Italian market has since fully recovered and has a very positive outlook. The private assets space is seeing rapid growth, with new product mixes that go beyond classic real estate. Venture capital and credit funds are also experiencing strong growth driven by a need to transfer liquidity to the real economy, which is also promoted by recent Italian legislative initiatives.
Finally, asset owners, especially pension funds, is a area where depositary banks are taking an ever closer interest as they have a key role to play in modernising the sometimes outdated administrative structures. This is especially important for the Italian market which has significant institutional asset volumes but lags behind the Netherlands and Germany in terms of efficiency. Having acquired both the business and the significant know-how of a leading Dutch pensions fund administrator, KAS Bank in 2019, we are confident that we can leverage this acquired experience to bring significant benefits to institutional investors operating on the Italian market.
The custodian evolves from service provider to business partner
Elena Giordano explains how asset management is rapidly adopting business efficiency and cost reduction practices that rely on cutting-edge technology solutions across the value chain.
Asset management companies are seeing their margins squeezed by investors who demand lower fees. In response, they seek to reduce costs and raise process efficiency. The investment industry is changing and asset management firms are reducing costs by consolidating their servicing needs with one partner that is able to provide support across a range of areas and help reduce the costs and complexity of doing business. CACEIS’ role is evolving from a service provider to business partner. This is seen in our aim to develop an integrated front-to-back-office service which optimises workflows and helps reduce costs along the entire value chain. Also, as our service offering expands, an increasing number of investment managers in segments such as private assets are taking advantage of the opportunity to fully outsource their administrative functions.
Transitioning from service provider to business partner is a natural step in the development of CACEIS, which has had the long-term objective of being a one-stop shop for integrated and modular support solutions. As a further illustration of our commitment to this objective, CACEIS and our sister company Amundi, the leading European asset manager, have developed in 2020 an innovative and seamlessly integrated "front-to-back" offer, ALTO* x CACEIS, covering execution-to-custody activities from portfolio management to depositary reporting. Amundi's ALTO fund management platform and CACEIS’ execution-to-custody offer provide a turnkey solution with the flexibility to suit all types of investor. As ALTO is fully integrated and handles all major asset classes, the offer covers the entire value chain, can significantly reduce operating costs, and is fully compliant with all regulatory requirements.
CACEIS’ one-stop shop model applies equally well to products such as closed-end funds, a sector that has been very resilient to the Covid-19 crisis, continuing its positive growth trend over recent years. CACEIS Bank’s Italian branch has an approximate 22% share of the Italian closed-end fund market and is a market leader in depositary bank services for SICAFs. CACEIS Group’s Private Equity, Real Estate & Securitisation division, marketed under the PERES acronym, allows clients operating in the Italian market to benefit from our international expertise and full PERES outsourcing capabilities for both traditional and added-value services, all with the flexibility to adapt client’s individual needs.
With our strong shareholder support and our flexible service offerings, CACEIS lives up to its “Solid & Innovative” motto.
*ALTO - Amundi Leading Technologies & Operations