The world’s four largest custodians – BNY, Citi, JP Morgan and State Street – safeguard a combined $180 trillion of assets, a sum which eclipses the world’s annual GDP or the total value of the global stock market.
They compete globally, yet also act as clients to one another and collaborate on infrastructure and initiatives that hold the industry together.
This is truly an exclusive quartet who share unique pressures, challenges and opportunities of delivering securities services at unrivalled scale in 2025.
In late October 2025, the heads of custody at these four organisations joined Global Custodian for a behind-closed-doors roundtable discussion under the Chatham House Rule for a candid conversation that captured the true essence of what it means to be a securities services giant right now.
The conversation which ensued was revealing of what truly occupies the minds of the world’s four biggest custodians, and the real challenges and opportunities they face.
Some comments have been attributed in this article, where the spokesperson was happy to be quoted.
“It’s positive that everyone has come together. We’re all in a room, we all know each other,” says Hannah Elson, global head of custody, J.P. Morgan. “I don’t know that 10 years ago that would have been the case, or that we would be so easy to pick up the phone to each other. There’s a huge amount of engagement and solving through things together, which I think is quite unique.”
Others remain anonymous, for obvious reasons.
“We caught the North Koreans trying to embed four operatives into our organisation,” reveals one speaker. More on that later.
The candid nature of the conversation occasionally revealed some challenges and concerns around market infrastructure providers and regulators. Yet overwhelmingly there was a mood of optimism in the room about a long-running purple patch for the big four, where revenues and assets under their guard are reaching new heights with every passing quarter.
“We are in a generation of unprecedented wealth creation, and the increase in the number of investors – not just institutional but also retail – is having a profound impact on the post-trade industry,” explains Amit Agarwal, head of custody, Citi Investor Services. “This shift is driving custodians to deliver real time custody and post-trade services to cater to evolving client demands in an ‘always-on’ world.”
A rare opportunity
The group agreed that the opportunity to discuss broadly what it means be a global custodian day-to-day was a rare opportunity and differed from the thematic public conversations which often focus on themes such as settlement compression, digital assets and regulation. Not that there’s anything wrong with those discussions – which are, of course, essential. But instead, the often-avoided difficult conversations around sanctions, consolidation, cyber-crime, acquisition integrations, fee compression, geopolitics and the real risk-reward trade off of providing native digital asset custody, were raised frequently during the discussion.
Take the topic of policymakers, for example, one speaker noted that the complexity of the ecosystem sometimes makes it difficult to achieve intended goals, even though regulators have good intention to start. “You sit down with them and you realise they don’t understand how we work,” noted the speaker with an air of astonishment.
The four were most excited about artificial intelligence. They were most worried about cyber security. The were cautiously optimistic on digital assets.
There was a fair share of frustration directed at CSDs. There were mixed views on emerging markets. And the tone on fintech partnerships has noticeably shifted, with the honeymoon period now long forgotten.
On the topic of geopolitics, well – it most certainly remains front of mind. In fact, the Russian sanctions following the invasion of Ukraine seem etched into memories of some of the speakers as one of the most challenging times in their respective careers.
That particular chapter of the history, of course, rumbles on and the debate over how Europe will utilise Euroclear’s frozen assets from Russia led one speaker to opine: “That is a really interesting scenario that challenges fundamental concepts around what it means to be a custodian and what it means to safekeep someone’s assets.”
Being a custodian is exciting, because of new asset classes and technologies, but it’s expensive because of technology demands and cyber defence measures.
The broadening of new asset classes and technologies has created an exciting environment for custodians, though the related costs to manage that increasingly complex landscape has skyrocketed. And that doesn’t include cyber security cost pressures.
Following the fallout of the financial crisis, a time defined by fee pressures, regulation and talk of custody becoming commoditised, the biggest players have emerged into an era where they are thriving. Spurred by new services with flourishing units for outsourced middle- and front-office services, custodians are now driving revenue across data, private markets and, likely soon, digital assets.
In a landscape which favours scale, the biggest four are investing like no others can, and winning out because of said investments. It’s a welcome respite from some difficult phases in recent decades. Which leads us to the first question we asked our guests…
Why is it a good time to be a custodian?
Okay, it’s a leading question, but let’s look at the facts: there has been a double dip of record revenue and record AUC/A among the big four players for the past three years. There are many reasons behind this, such as rising market valuations, higher trading activity, expanded mandates and market consolidation driving business to the largest custodians.
“It’s a great time to be a custodian,” says one speaker, “client activity is buoyant, we’re seeing huge inflows in active ETFs, issuance up at record levels. From a business perspective, it’s never been better.”
In addition, the emergence of private markets, digital assets and the cross-selling of products beyond just the back-office, has ushered in a new era for the securities services giants.
“The number of engagements we’ve had with clients looking at front-office, middle-office technology, in addition to what they typically take as a custodian back-office, has really accelerated over the last 18 months or so,” says Chris Rowland, head of custody, digital and fund services product, State Street. “We’re super excited about that trend and long may it continue.
“Our clients have been, for many years, looking at their operating models, but that has accelerated with the last couple advancements in technology helping that process. Every single conversation at the moment seems to be on something about AI and how that can be used. Combine that with data and how data is being utilised by our clients, that has made a massive difference and has really accelerated their enthusiasm for potential change.”
At the same time, custodians are venturing into new services and asset classes while spending a significant amount on upgrading their technologies. AI is being quickly deployed, the digital asset space represents opportunity, and even settlement times are coming down to a point where talk of same day – or instant – is a not-too-distant reality.
“I’m genuinely excited around the new tools we have,” says Ryan Cuthbertson, global head of custody services, BNY. “I see my job as being a plumber and we need to make sure that we’re connecting issuers and investors, and the new tools that we’ve got allow us to do that quicker and better.”
We’re certainly in a period of regular annual growth in the 2020s. As of the end of Q3, Global Custodian had tracked eight consecutive quarters of collective AUC/A growth among the top 10 custodians.
But then came the caution.
Perhaps it’s experience, or an Icarus-like concern of getting carried away, but you could almost hear the harmonious background music suddenly stop amid talk of how great everything is, as one speaker cautions that “there are some warning signs”. Another acknowledges “it won’t be this way forever”, which sparked some debate at the table.
“I don’t disagree with anyone in the room, we always have this caution and it’s a good, healthy caution to have,” another speaker pushes back. “But if I look at kind of the growth we’ve had, it’s been despite the volatility that we’ve seen – and I’m talking from Covid all the way through to the energy crisis, interest rate crisis, and what we’ve seen with the new US administration. There’s been a bit of volatility and we’ve all benefitted from that, but it hasn’t really impacted either deposit growth or asset growth. So maybe I’m going to be a little more cautiously optimistic that I don’t think we’re going to suddenly see it go the other way.”
Why is it a challenging time to be a custodian?
During this impressive run of success and progress among the Big Four, there have been several crises endured. From Covid to tariffs, wars to blackouts, black swan events have become increasingly common. But few seem to have impacted the largest custodians more than the fallout from Russian sanctions.
In an age of heightened geopolitical tensions, custodians have a more difficult task than ever of keeping the ship steady.
Geopolitical tensions make it a difficult time to operate as a custodian. For many years, Western banks had identified huge opportunities in markets such as Russia and China, but the 2022 invasion of Ukraine sent shockwaves through the asset servicing world – with banks forced to rewrite the rulebook on risk and learn to expect the unexpected. The sanctions stemming from the start of the conflict – on both sides – still have ramifications for these custodians today.
“Geopolitics is always an important part of what we do, but it’s the way that the world continues to become multipolar that is having such an impact,” points out one speaker. “A lot of different trading corridors, investment corridors, and bilateral multilateral alliances are being formed.”
Agarwal adds: “Our clients are looking for advice on tactical investment opportunities or are trying to risk mitigate and rebalance portfolios. There are only a handful of the big players that have the wherewithal and the actual boots on the ground to be able to guide and enable clients to make better decisions, react more quickly and remain nimble in global markets where situations and business models can change overnight. Our goal as custodians is to provide clients with stability and optionality in a world of change.”
Another speaker notes: “Russia is the big example because it has been so significant, so unprecedented, and something that didn’t follow the rulebook. And so, we’ve all had to learn as we go through this.”
Then things got really, really interesting.
“Think about what’s happening now with Europe coming under increasing pressure to figure out how to continue to finance Ukraine – and what that means for an institution like Euroclear, supposedly the safe haven, boring bank that we go to to ensure our Eurobonds are kept safe,” notes one speaker.
“They’ve been challenged, in a sense, with a reparation environment. The €190 billion that sat there in Euroclear, which is from sanctioned Russian frozen assets, is now going to potentially be made available to finance a war. That is a really interesting scenario that challenges fundamental concepts around what it means to be a custodian and what it means to safekeep someone’s assets.”
Another picks up on that point, stating that those assets are not all held within Euroclear. “They are represented in the books and records of banks, financial market infrastructures (FMIs) and intermediaries all over the world.”
Cybersecurity: The price of scale
The conversation then moved to cyberwarfare, sparking more interesting debate.
With great scale comes great exposure, unsurprising considering all four institutions are considered Global Systemically Important Banks (G-SIBs).
As we mentioned at the start of the article, one participant disclosed that their organisation had recently intercepted attempts by foreign operatives to infiltrate internal systems. “It’s real,” they say plainly. “We’re spending extraordinary sums to defend ourselves – not because we want to, but because we must.”
For an interconnected industry, the worries stretch far beyond each bank’s own four walls. Being intrinsically linked to a network of sub-custodians, market infrastructure providers, asset managers, owners, funds, technology firms and more, there would be a monumental knock-on effect should a cog in the network fall.
“The bigger the bank, the more you’re spending,” says one participant.
Another notes: “Disproportionately, that means that you are able to have better threat intelligence. It means you have better capabilities available to you. But as you go down through the hierarchy of custodians, that becomes increasingly worrying because not everyone can keep up.
“Where’s that weakest link? Well, it could be anywhere, because the actual relative amounts of money available are not at the levels they probably need to be at the smaller custodians and the smaller CSDs.”
Then the real worry emerged. In fact, this was touted as potentially the biggest thing that could happen to the industry since the sanctions following the events of February 2022.
“We’ve seen events that have been impactful,” acknowledges one speaker, pointing to the recent Amazon outage. “But what we haven’t seen yet is the big one that knocks us all out for several days. Whether that’s going to be Swift or a big FMI, I think that is, at some point, going to be the next the next big thing that we’re all going to be working through.”
Firms are now investing heavily in rapid-recovery architectures – maintaining parallel infrastructure in secure “DMZ” environments that can be spun up instantly in the event of an attack.
The conversation also turned to the evolving nature of fraud. AI, it was noted, is being used not just by custodians, but by criminals. “We’re seeing clients’ emails and IDs being cloned in ever more convincing ways,” one participant notes. “AI is a tool for both sides.”
Still, the tone remains one of resolve rather than fear. “We’re realistic about the threat, but we’re also better equipped than ever,” says another. “Cybersecurity has made us sharper, more collaborative, and ultimately more trusted.”
Quantum computing also entered the conversation, less as hype than as horizon planning. “If quantum breaks encryption by 2035, that’s not far away in development terms,” one participant warns. “We need to be quantum-safe long before that.”
The discussion reflected a quiet confidence that custodians – perhaps more than any other segment of finance – have both the discipline and the incentive to lead in AI governance. “This industry has always been about control, validation and trust,” one executive concludes. “Those principles translate perfectly to responsible AI.”
We need to talk about CSDs
If there was a note of collective frustration, it came in discussion of FMIs. A particularly topical conversation, given the recent release of a report on Europe’s rising FMI fees, with the sizable differences between European and North American costs cited as a growing burden that custodians struggle to pass through.
“FMI costs have steadily increased while our fees have compressed,” one executive says. “The result is a squeeze that isn’t sustainable.”
According to the study, published by the Association for Financial Markets in Europe (AFME), custody fees at European CSDs were between 19% and 650% higher than in North America.
International CSDs were found to be the most expensive, with charges up to 139% greater than those of their domestic European counterparts, found the report.
The analysis shows that higher custody costs are not offset by economies of scale. Larger CSDs, when measured by assets under custody, often applied higher custody and settlement fees than smaller peers.
“There’s a lack of competition,” one participant argues. “Absent pressure, FMIs operate in very comfortable monopolies. They need to invest in AI, data and resiliency at the same pace we do.”
The panel agree that the next five years could bring real change. European and UK market infrastructure consolidation has yet to yield efficiency gains, leaving an opening for greater regulatory scrutiny and potential reform.
“Scale is probably going to win out in terms of how that process goes,” one participant explains. “But to me, it’s welcome because we can’t have this situation we’ve got at the moment, where Europe and the UK are fundamentally uncompetitive versus the US in terms of underlying CSD costs.”
The onus should also be on the custodians to check and challenge the organisations, another adds. “There is no reason why a CSD bill should have 215 line items of charges. I think we are all challenging ourselves as well to make sure that we are appropriately checking, challenging and pushing back. Around 20-30% of the charges are not even AUC or settlement, they are just ancillary charges for paper, fax and recon, et cetera. There are certainly 20-25% of just hygiene efficiencies that through proper governance, we should be able to extract out.”
If there was one theme that unified the four participants with excitement and optimism, it was technology. Often criticised for their legacy technology and the fact that there is still some reliance on – wait for it – faxes, the experts in the room felt their advancements have been significant in recent years. One notes that the group was nearly at the end of their modernisation journey.
Collectively, the institutions represented at the table are investing well over a billion dollars a year in technology – a comment most have made publicly in the past – not just to improve legacy systems, but to create future-ready platforms.
“We’ve spent years modernising our estates,” one speaker explains. “The exciting part is that the curve is finally shifting. More of our investment now goes into innovation rather than maintenance.”
The contagious excitement around AI
Artificial intelligence, in particular, has moved from hype to tangible productivity. Several executives describe development cycles cut from 12 months to as little as three. AI now generates rules, writes user stories and supports engineers, reducing time-to-market and freeing up human capacity for higher-value work.
Cuthbertson highlights that 100% of BNY staff are trained with AI and more than 50% are using it on a daily basis.
“It’s not just operational efficiencies for us. We’re seeing development times cut,” he adds. “We recently did a proof of concept that previously would have taken us 12 months. We did it in three [months] because we have AI generating rules for us, it’s writing user stories and it’s also providing the framework for engineers to code as well.
“We’re seeing it throughout the development life cycle and also in pure engineering. The access and system vulnerabilities that we spoke about before in terms of remediating for cyber, Eliza (our AI) is doing that for us. Of course, humans are in the loop and we’re making sure that everything’s checked, but the heavy lifting and boring type of engineering that I’m sure people don’t want to be doing is actually starting to be taken over by AI.”
Undisputedly the talk of the town at the moment, agentic AI – systems capable of taking contextual decisions – is already reshaping systems and organisational models. What was once a delegated operations or technology project has become a front-to-back, product-led transformation. As one executive observes, “This isn’t a lab experiment anymore. It’s a board-level agenda.”
Some of the custodians believe that AI – rather than blockchain – will be the key driver of the operational acceleration toward same-day or even instantaneous settlement.
“I really think it’s AI that will drive the efficiency that we need,” Elson adds. “I think it’s AI more than DLT that is going to generate the efficiency that’s going to get us to T0 at scale in traditional assets and markets.
“It’ll take out those remaining tasks that are still manual and drive the insights that we all need to be able to speed up cross-border settlement, allocation and trade matching and ultimately get us to T0.
Others highlighted AI’s role in client service. “Sixty per cent of client queries are trade-status questions,” said one. “That’s now solvable through agentic AI. We’re finally matching technology to the problem.”
The organisational implications are profound. AI has become embedded in strategy, product and client functions, not just operations. “This is top-down,” says one executive. “It’s no longer a technology initiative – it’s how we run the organisation.”
The need for scale sparks the consolidation question
There were few words used more than “scale” throughout the conversation, describing the significant amount of investment and work needed to operate a top tier custodian in today’s environment.
“Think about how we spend our budget,” points out one speaker. “We’re all still somewhere on our modernisation journeys, but hopefully coming towards the end of those. We still have to support clients that want to go into new markets and new assets. We’re dealing with AI, with data, with blockchain, with cyber, with resiliency, with risk, with market infrastructure change and consolidation, and global regulatory change.”
The elephant in many rooms during custody conversations is usually consolidation. Not this room though, as speakers tackled it head on.
There have been a number of exits across the custody landscape over the past decade, from the Nordics to Australia, to banks exiting the global custody game to operate solely in single markets.
But if the biggest are getting bigger, and the investment required to compete is so significant, then surely more exits are inevitable. The speakers hope this is not the case.
One participant notes: “We need the Citis, the BNP Paribas and the HSBCs. We need them to stay in all of these markets because they’re much better at doing that – that’s what they do. We have got to pay them to be sustainable, to invest in cyber and technology and data integration and all these things, while at the same time managing all of that fee compression.”
Consolidation among the top ranks is also a fascinating topic. State Street attempted to acquire the investor services business of Brown Brothers Harriman a few years ago, while the Wall Street Journal chose a sleepy Sunday in July to reveal that a conversation had occurred between BNY and Northern Trust CEOs over a potential deal. Neither of these occurrences were discussed during the roundtable.
What did come to light was the difficulty of integrations post-deal. It may be less common now, but there have been periods of M&A activity on the global custody scene in the past, leading to some in the group believing that partnerships can often be the way forward.
“There’s too many examples in our industry where acquisitions have been completed, but they don’t actually see it all the way through into an integrated model,” says one speaker. “In today’s environment, you can’t afford to have that happen.”
Partnerships over aggressive acquisitions
State Street and BNY have been the most active on the M&A front of the four. Arguably it’s easier when you are predominantly a trust bank as opposed to an investment banking giant with a strong servicing arm.
State Street has, in recent years, added Charles River Development and CF Global to its ranks on the front-office provision side, and private markets outfit Mercatus to try and capitalise on the burgeoning sector. With the aforementioned BBH deal now in the rear-view mirror, State Street recently finalised a deal Mizuho Financial Group’s global custody and related businesses outside of Japan in October, in a prime example of a partnership leading to an eventual transaction.
“When you look at the recent deals that we’ve done, Mizuho was one hundred percent off a local market partnership. Both firms benefitted from the deal that was done. And as a consequence, we happily got it done in pretty quick order,” explains State Street’s Rowland. “I’m a big believer in looking for the partnership opportunity, because they are ultimately the ones that serve our clients the best.”
BNY has also added complimentary businesses in recent years, firstly through funds technology outfit Milestone Group, and subsequently managed account solutions provider, Archer.
“Robin [Vince] has been super clear that we’re open for having those conversations, but he’s also been incredibly clear that the bar is very high,” explains Cuthbertson. “The Archer acquisition to leverage off your point, Chris, was one of capabilities. It’s a capability that we didn’t have. We think that’s going to be a growing area, and so that investment, that acquisition, made sense.”
The M&A scene has been interesting in the custody space with very few deals occurring and sellers often struggling to find a partner willing to pay up and take on the integration burden. This has led to some banks reluctantly keeping these units, or exiting the business without a suitor, only for its competitors to sweep up clients left without a home anyway.
“Am I super interested in buying another smaller custodian? I think the answer is maybe not,” says one speaker. “The point on scale would suggest that people are going to gravitate to us over time anyway. So what’s the premium you’re paying? And is that a piece of business that you think is going to give you the right return on investment?”
A reshaping of the buy versus build debate
In 2018 Global Custodian ran a feature titled: How custodians learned to stop worrying and love the fintechs which encapsulated an ongoing trend where banks were suddenly putting their trust and dollars behind a wide range of start-ups promising a plug-in transformation and agility dream. Countless partnerships, investments and funding rounds followed, with varying degrees of success.
From the custodian perspective in 2025 however, sentiment appears to be cooling.
“We saw this explosion of fintechs into our space and we partnered with many of them,” highlights one speaker. “What’s been really interesting to see is that it’s incredibly hard to be sustainable as a fintech in this business. Some have been reasonably successful and those ones – in my opinion – are the ones that have had a very clear objective which they stuck to, or that have been consortium based, or really had the right knowledge and expertise around the table to be focused on that mission.
“There are also the ones that haven’t, that have given up and gone to private capital. But the minute you do that, all of a sudden your business becomes about profitability and not about the mission, and the whole thing falls apart.”
Another speaker opines: “I think there’s a role for them to play, especially when it comes to standardisation and solving common problems that individually none of us can solve by ourselves. But there’s a lot of risk there and they take a lot of money and a lot of capital to be able to scale at the level we need them to scale at. That will continue to be an interesting space to see who makes it and who doesn’t.”
Another added that many of the innovations once offered by fintechs have now been internalised. “We’re better at building those capabilities ourselves. When we do partner, it’s because we’re all in it together.”
There was a strong feeling in the room that a lot of fintechs were actually set up to the benefit of the broker-dealer community – and to a lesser extent the buy-side – but not necessarily with custodians front of mind.
This felt like the first time this conversation had occurred between the four participants, who have interacted plenty in the past, as realisation appeared to dawn across the table.
Agreeing, one adds: “The consequence of that [focus on the broker-dealer community] was that it ignored the necessity of having a sound business case for the custodian.
“The assumption was the custodian will just pay because the buy-side client or the broker dealer said ‘you will do this’. That has not panned out to be the case, which has created a challenge in those business models.”
Still, looking back at the 16 firms Global Custodian named in 2022, many are still thriving and playing a significant role in the future of the industry. Those most highly thought of are evident through future rounds of investment and mandates with the banks that have invested in them. According to the speakers, despite a reduction in the volume of partnerships, there is still room for fintechs to have an impact.
“There are still some really challenging and interesting areas which we have not figured out as a collection of banks or with fintechs,” one speaker notes. “Just take tax and what that means for our businesses. I mean that is the standout example where we still have not got our heads collectively around how we solve for the paper that floats around, the complexity or the risk we have with it. And it’d be really nice to actually see someone come in and challenge that and say ‘we have a solution for you’.”
Digital assets: The future or hyperbole?
Much like the blockchain hype on the mid-2010s, everyone seems to be unquestionably jumping on the digital assets bandwagon now – whether that be native cryptocurrencies or tokenised securities. We have rarely ever stood back to ask whether this is, unequivocally, the future, or whether traditional custodians can actually make money from this trend.
But even behind closed doors, the four experts still see plenty of potential in a tokenised future.
“I don’t think it’s hype anymore,” says one executive. “It’s just slow. Transformation on this scale always is.”
Another notes that the convergence of decentralised and traditional finance now feels inevitable. “We’re seeing a momentum we didn’t have even two years ago. There’s FOMO, yes, but also focus. The industry agrees on which problems technology can genuinely solve.”
Custodians view stablecoins and deposit tokens as potential enablers of true 24/7 settlement – the long-imagined “atomic” matching of cash and securities. “Until the cash leg is instant, you can’t have instant securities,” one explains explained. “DLT gives us a way to close that gap.”
Yet questions remain about commercial viability. “You have to be in this space,” one leader says. “But being there and making money from it are two different things.”
Several see near-term opportunity in tokenised money-market funds and digital wallets. “Wallet ownership is going to define the next competitive frontier,” one participant argues. “If you own the wallet, you own the client relationship – just as PayPal or Alipay own the cash experience today.”
Overall, the consensus was pragmatic: digital assets will integrate gradually, not disrupt overnight. “We started talking about this in 2016,” Elson reflects. “It’s 2025, and now it’s becoming more real – but we expect the market to continue to mature gradually.”
Final thoughts
By the end of the session, what stood out was a collective purpose. Despite diverse strategies, each custodian voiced confidence in the industry’s trajectory.
“There’s a spirit of innovation now,” one guest says. “For years, custody was about efficiency and cost control. Today, it’s about creativity and value creation.”
Another summed it up simply: “We’ve proven we can modernise without losing trust. That’s our biggest achievement.”
From the outside, the custodial world can appear slow-moving. Inside the room, it felt anything but. The conversation spanned quantum computing, retail investment reform, FMI transparency and the convergence of traditional and decentralised finance – yet returned repeatedly to a single theme: optimism grounded in realism.
“The beauty of custody,” said one participant, “is that it evolves quietly until, suddenly, it’s the foundation for everything else.”
As the session closed, the sentiment was clear. Far from being the back-office of the markets, global custodians see themselves as architects of their next era. An era defined by intelligence, integrity and unprecedented possibility.