Corporate services mergers ‘will increase’

CONSOLIDATION in the corporate services, trust and fund administration sector is predicted to accelerate, alongside niche specialists.

Keith Hale, executive chairman, TrustQuay. (Picture @rugfoot Richard Gray)
Keith Hale, executive chairman, TrustQuay. (Picture @rugfoot Richard Gray)

The findings are set out in a survey by industry technology provider TrustQuay, which has offices in Guernsey and Jersey. Ninety wealth managers, private banks, family offices and corporate services providers, plus trust and fund administrators, took part in the research.

Some 81% of respondents felt the industry was undergoing unprecedented change, while 59% of respondents predicted consolidation would increase over the next two years. Of those surveyed, 41% expect their own firms to increase levels of merger and acquisition activity.

In tandem with consolidation, three-quarters of respondents said they were seeing an increasing divide between larger global players or market consolidators and those which are specialists in niche markets and service areas.

‘The significance of this increasing consolidation and accelerating polarisation of providers between global consolidators and niche specialists cannot be underestimated and is driving a once in a generation change in the industry,’ said Keith Hale, executive chairman of TrustQuay, pictured.

‘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.’

On digitalisation, the survey found there was an average ranking of five out of 10 in terms of how far firms felt they had progressed on digitalisation. However, 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.

In the face of rising end client expectations and regulation, 94% felt technological innovation needs to accelerate, with 50% of them agreeing strongly.

‘Despite the challenges, this time of unprecedented change can be a great opportunity for those firms who are able to successfully adapt to change. But firms need to act now,’ added Mr Hale.

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