Mark Austin, pensions and insurance executive, EMEA, Northern Trust
Well not quite the ending that Agatha Christie had in her 1939 novel, but the coming year in the UK will be the year the pensions market enters rapid and fundamental consolidation.
The process will cover the whole market: the 86 LGPS in England and Wales will come down to eight or less pools, the DC market will reduce from c.28,000 plans to potentially c.30 master trusts, and the 5,100 DB schemes will move to a handful of insurance companies as they continue their end-game journeys.
This consolidation seems overdue according to some in the industry. Other countries with similar pensions provisions embarked on this consolidation journey years ago and are reaping the benefits, according to the UK Treasury.
This shift to consolidation will have a profound impact on the industry, from asset managers to consultants and member record keepers as well as asset servicing providers. Supporting the consolidation activity and becoming comfortable with a numerically smaller market with greater purchasing power, are just two changes. The impacts will not stop here. As these larger pools emerge, they will increasingly insource activities, further changing the market and its dynamics, firmly putting the buy-side in full control in the future.
Val Wotton, managing director and general manager of DTCC Institutional Trade Processing
Global accelerated settlement cycles will continue to be the key theme for market participants in 2025, with attention shifting to implementation in the UK and Europe. DTCC wholly supports the recently published UK’s Accelerated Settlement Taskforce recommendations which focus on post-trade automation as a T+1 enabler, and ESMA’s recently issued final report, which calls for automation and harmonisation across the EU region in order to make the move to a T+1 settlement cycle.
We recommend that market participants approach T+1 implementation in the UK and Europe as an opportunity to evaluate holistically at their middle and back-office functions and assess how they can increase operational efficiency through automation and standardisation through central matching solutions that enable same day confirmation.
Angie Walker, global head of banking and capital markets, Chainlink Labs
In 2025, blockchain technology will redefine global finance, with fund and asset management leading the way. Asset managers are accelerating the tokenisation of funds, moving beyond the likes of cryptocurrency-based ETFs and Money Market Funds (MMFs) to include traditional assets such as securities along with Real-World Assets (RWAs) like real estate, gold, private equities, and more.
Many of these will increasingly move onchain, whilst, from a payments perspective, stablecoins, tokenised deposits, and CBDCs continue to gain broader acceptance in parallel. This will drive efficiency and innovation across the entire issuance and asset servicing lifecycle within digital asset ecosystems.
The game changer? Seamlessly connecting tokenised assets with established payment networks. These integrations will turn proof-of-concepts into production-grade reality, unlocking scale, efficiency, and broader investor accessibility across global finance.
Virginie O’Shea, founder, Firebrand Research
The coming 12 months is going to continue to be dominated by an even more volatile geopolitical environment and a tough global economic climate, with rising trade tensions bleeding into continued budget restrictions for many global firms. Major market structure changes are looming, but they will seem distant in 2025 versus the more immediate priorities of dealing with buy-side and sell-side client rationalisation.
Buy-side COOs have already dubbed it the year of saying ‘no’ – no to experimentation that isn’t core to their future ambitions, no to spending money on unprofitable business lines and duplicative processes. Expect more consolidation and strategic exits from certain markets and products. Those that can help their clients cope with this strategic consolidation and support the rationalisation of their operating models will win out.
However, it won’t all be retrenchment, the ongoing push of the industry into private assets will represent bright spots for those that can service those assets appropriately and combine both the public and private worlds to highlight points of intersection and inter-dependence. Data investments in the right areas will be key to success across all of these endeavours, so the role of the custodian chief data officer will only get more important over the year.
Bill Meenaghan, CEO of SSImple
The financial services industry is set for a year of transformation. The 2024 announcement of T+1 settlement across Europe by 2027 marks the start of a major shift, exposing the limitations of outdated systems and manual processes. The days of relying on patchwork solutions are numbered – upcoming demands like 2025 operational improvement mandates and evolving global compliance frameworks will test firms’ readiness. Failure to modernise won’t just invite regulatory penalties – it will also erode client trust.
In 2025, compliance will be more than a regulatory requirement – it will be a strategic opportunity. The firms that succeed will rethink their operations, leveraging automation, optimising data, and fostering agility. At SSImple, we believe the traditional approach is no longer sustainable. Adhering to FMSB guidelines and aligning with both ESMA and FCA T+1 recommendations shouldn’t be a burden, but an opportunity to improve efficiency, spark innovation, and gain a competitive edge.
The industry is at a turning point. Firms can choose to maintain the status quo or embrace change and take the lead in this new era. For those prepared to adapt, 2025 won’t just be a year of challenges – it will be a year of transformation.
Viraj Kulkarni, CEO and founder, PIVOT Management Consulting
Year 2025 brings greater focus on VUCA (volatility, uncertainty, complexity and ambiguity) in capital markets thereby providing opportunities and impacting the securities services industry.
Geopolitical factors, higher liquidity due to T+1, (T+0), increased focus on cyber security, increased digitisation, will be the driving forces. The bold and willing to adapt in securities service industry will benefit.
Business opportunities, especially in APAC, Africa and US are bound to grow. The Middle East and Europe will see opportunities for providers invested in developing processes and settlements systems with T+1, given EU’s focus to launch T+1 by 2027.
In Europe, Cyprus Capital markets (the second fastest GDP growing in EU), would see launch of new products, providing opportunities in securities services and fund accounting.
Indian Capital markets would witness growth of the number of investors from cross border (currently 61 countries), Demat accounts cross the 200 million, double-digit growth of AIF segment, IPOs, increased digitisation, political stability, differentiated products, more activity at GIFT City as well as financial literacy.
These would lead to growth of the Securities Services segments across inflow and local space. Outflow business will in comparison be muted. However, the downsides are increasing costs, attrition, increased need for training.
Eric Li, head of competitor analytics – banking research, Coalition Greenwich
Private debt funds have experienced exponential growth in recent years, fuelled by a combination of market dynamics and investor demand. As debt instruments, such as mezzanine financing, subordinated debt, distressed debt and structured credit, become more and more complex in the funds’ holdings, we expect the servicing model for this industry to evolve in 2025.
Traditional custody and fund accounting will become more commoditised on the back of huge investment into digitalisation and AI. The bespoke servicing model will be replaced by a more standardised approach.
More focus will also be placed on trustee, agency and cash management services that are critical in the life cycle of private debt funds. For example, escrow services, liability management in debt restructuring, front-to-back services for complex loan products (CLOs, CDOs etc), securitisation solutions, project finance services and special purpose vehicles (SPV) etc.
Lastly, data insights of traditional assets have become the norm in servicing models, but we have yet seen much in the private debt industry. This might change in 2025 following some of the major M&A deals that have happened in the past year.
Michael Anderson, EVP, AI for Enterprise, SoundHound AI
With one in five banking customers lost due to poor experiences, these AI agents offer efficiency, accuracy, and consistency – qualities that will soon make them the preferred point of interaction. In many of our deployments, AI agents already resolve more than 90% of customer requests without escalation.
Operationally, AI agents will streamline workflows by freeing employees to focus on higher-value tasks. Currently, financial services employees spend up to 25% of their work week searching for information, documentation, or support from colleagues. Implementing AI agents that can retrieve information and even perform tasks on behalf of employees can unlock significant efficiencies.