The world of fund administration is likely to see a higher level of consolidation in the next two years due partly to “unprecedented” changes in areas such as technology.
A TrustQuay survey showed many respondents – which included clients of fund administrators – see the fund administration industry polarising between global providers that play a consolidating role, and specialist fund administrators operating in niche areas such as private equity.
TrustQuay, a tech provider, surveyed 90 individuals globally including wealth managers, private banks, family offices as well as fund administrators and others. Over 81% felt the industry was undergoing unprecedented change and 59% predicted consolidation would increase over the next two years, partly as a reaction to technology needs and fragmentation.
Increasing consolidation will lead to rapid digitalisation in fund administration, the survey findings suggested.
The findings – which included that automating workflows, moving to the cloud and implementing client portals will be the three main areas of change in coming years – are contained in TrustQuay’s ‘Future Focus Report’. The findings apply to corporate services as well as fund administration.
A slow rate of digitalisation was identified. Respondents gave an average ranking of five out of ten in terms of how far firms felt they had progressed on their digitalisation, while two-thirds of respondents rated their firms as low as six or under, with a quarter rating themselves four or under on the digitalisation scale.
Keith Hale (pictured), executive chairman of TrustQuay, said: “Our prediction is that in the next five years the industry will shrink from thousands of players to hundreds, coalescing around a small group of global players, alongside specialist firms who focus on a specific niche market or product offering.
“As a consequence, the current middle tier of providers will be squeezed into one camp or the other.”
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