Impact of Digital Technologies on Asset Servicers: Luxembourg Industry Benchmark

Asset servicers sit at the end of the financial services industry and feel the full effect of this position. Faced with pressure to lower fees so that asset managers are able to reduce costs – and create value – for end clients, they often experience margin compression. Further, as asset managers offer clients more variety, asset servicers too must adjust their offering – e.g., number and diversity of funds served – to mirror their clients. The high pace of regulatory change in wealth and asset management also results in a constant need to scale up.

It was in this context that EY Luxembourg’s study on digitalization in asset servicing was launched. In the analysis of the results, what became clear is that asset servicers all share the belief that the future of asset servicing will be enabled through technology, data and value-added services. In our first edition of the research, in 2022, it became clear that most industry players were still early in their digitalization journey. Despite a shared belief in technology and data’s role in asset servicing, the adoption of advanced technologies was fragmented, causing “digital frictions”. In our second edition of the research, released in 2024, we see asset servicers progress to a more advanced level of digitalization. However, they are not yet at the point where cost and service advantages have been fully secured. 

To help asset servicers in their digitalization efforts, we propose a model to help asset servicers assess their digital maturity, and a framework to take their transformation to the next level.