Custodial & Trust Services
Companies in this industry hold or manage assets for the benefit of an individual or business. Major companies include the custodial or trust operations of Bank of New York Mellon, Citigroup, JP Morgan Chase, and State Street Bank and Trust (all based in the US), as well as BNP Paribas (France), HSBC (the UK), and Royal Bank of Canada.
The custody service market will grow from about $40 billion in 2023 to about $45 billion in 2024 with a compound annual growth rate (CAGR) of 9.2%, according to the Business Research Company. Q3 2023 key global custody banking giants based in the US (Bank of New York Mellon, State Street, JPMorgan, Citigroup, BNP Paribas, and Northern Trust) together account for about $6 billion, according to PostTrade360.
The US custodial and trust services industry includes about 2,300 establishments (single-location companies and units of multi-location companies) with a combined annual revenue of about $16 billion. The industry includes establishments such as bank trust offices, nondepository trust companies, and administrators of private estates. Providers of custodial and trust services are included in the asset management industry, which is covered in a separate profile.
Competitive Landscape
Demand is driven by demographic and market trends such as the growing population of retirees and the accumulation of wealth and investable assets. The profitability of individual companies depends on the volume and performance of the assets they hold. Large companies have advantages in providing expertise in a wide range of custodian or trustee services. Small companies can compete by focusing on a single service or type of trust. The US industry is highly concentrated: the 50 largest companies account for more than 85% of revenue.
Because the law states that a trustee can include any individual of legal age (18 in most states), trust companies may compete with family members or professionals such as accountants, attorneys, financial advisers, or any other private individual who is paid for his or her services as trustee. An entity such as bank or trust company can act as a trustee only if it has been given trust powers under federal or state law. Commercial banks generally have trust powers; savings banks and credit unions do not.
Products, Operations & Technology
Major custodial services include the holding and safekeeping of assets for a client, collecting interests and dividends, and providing statements of accounts.
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