Funds Europe talks to Northern Trust’s David Wicks about the firm’s 50 years in EMEA and future outlook.
On March 1, Northern Trust opened its new European banking base in Luxembourg, redomiciling its EU passporting bank from the UK. The move comes as Northern Trust celebrates 50 years in the Europe, Middle East, Africa (EMEA) region. David Wicks, new CEO for the company’s EU bank and head of Continental Europe, says the opening is not just a decisive response to the current uncertainty around Brexit, but is also a bolstering of Northern Trust’s regional presence.
“As a top-ten administrator by assets under administration, we are at the forefront of the Luxembourg funds industry and see Luxembourg as a natural hub for our expanding business in Continental Europe,” he says.
“The asset servicing landscape has transformed since we established our first EMEA-based office in London back in 1969,” adds Wicks. In fact, it wasn’t until a change to US pensions law in 1974 that the term ‘global custody’ was coined. Since then, asset servicers have continued to evolve beyond traditional custody and depositary services.
“The universe of services that our clients require continue to expand, driven by industry trends such as the move from active to passive funds, from equity investments to alternatives, the migration from defined benefit pension schemes to defined contribution, the increase in regulation and ongoing cost pressure,” says Wicks.
Each of these trends has created the opportunity for asset servicers to develop new capabilities, from ETF servicing to transition management to helping clients optimise their operating models by full outsourcing or component outsourcing of their front, middle and back office – whether that be trade execution, trade matching or collateral optimisation. Wicks cites the bank’s launch of Integrated Trading Solutions, an end-to-end execution, middle-office and settlement capability designed to help clients achieve better overall trading and performance outcomes as they face unprecedented financial and regulatory pressures.
The firm has also continued to invest in staff across its network of 11 offices in EMEA. “We’ve invested in our local teams to ensure we have an intricate understanding of our clients’ unique needs, and this has enabled us to evolve with our clients – navigating some challenging times, but also taking advantage of many exciting opportunities.” Wicks gives the example of a pioneering initiative that originated in EMEA and saw Northern Trust launch the world’s first commercial deployment of blockchain technology for the private equity market in 2017 – making transactions more secure for everyone in the chain.
“Technological advancements are bringing new and exciting possibilities, and we’ll continue to leverage new technologies and solutions that add real and immediate value to our clients – for example, we made a number of key strategic investments over the past year which has made it easy for clients to access the best technology in areas such as currency management and algorithmic trading.”
Asset servicing requires continuous investment to stay in line with client, regulatory and broader infrastructural requirements, and Northern Trust is currently making significant investments in its global operating platform, delivering new and enhanced capabilities across custody, middle office, fund accounting and transfer agency.
Wicks believes this will drive substantive benefits to its clients in the months and years to come, “Through this multi-year investment, we are aspiring to set a new industry benchmark for asset servicing to benefit our clients and deliver sustainable growth as we look to the future. Ultimately our goal will continue to be making it easier for our clients to do business – both with us and in the market place.”
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