Chapter 2: The outlook – what are we doing to achieve scale?
Client demand is the primary catalyst
Securing capital investment remains difficult because return on investment is hard to quantify – especially when the value lies in client experience and retention. The logic is simple: lost clients means lost profit. Enhancing investor experience must therefore be a top priority for every participant in the asset servicing chain - including issuers (see next section).
And the respondents to our survey agree. Client demand is now the leading driver of investment for 38% of firms, often unlocking funding in some of the most stubborn areas of assets servicing.
Tax Reclaims have become a prime focus area. As interest rates stabilise and alpha becomes scarce, investors view tax leakage as an avoidable performance drag. Reflecting this, 47% of respondents consider client demand to be the key catalyst for tax reclaim investment.
Similarly, 43% identify client demand as the trigger for improvements in mandatory corporate events, and a welcome catalyst for investment into class actions which, at 27%, has seen the greatest volume increase year-on-year (2024-2025) out of all event types yet it has seen a mere 2% in resourcing growth over the same period. Time for a change. Joint automation programs demonstrate measurable return-on-investment (ROI), particularly in cutting manual steps and reclaim cycle times.
Client demand is now the biggest trigger of investments into asset servicing – especially in tax.
But corporate action error rates are still core
Curbing costs and protecting P&L
The one constant in securities servicing is the focus on containing cost. Investing to grow is accepted, costs caused by errors are not. Unsurprisingly, error reduction is a major catalyst for change; 45% of firms are investing to improve income event accuracy and 41% are targeting voluntary events automation. This correlates directly with the event types generating the greatest volume of errors.
of firms are investing to improve income event accuracy
are targeting voluntary events automation
These correlate directly with the event types generating the greatest volume of errors.
What are people doing to improve the P&L of asset servicing? Inside the firm, tax reclaims are the new focus for investors and their custodians
But the geographic pattern of transformation spending tells a different story. While automation remains a universal goal, mandatory events dominate budget allocation, especially in APAC – a surprise given their maturity and lower risk profile.
This emphasis contrasts sharply with voluntary corporate actions, where volumes surged 49% year-on-year, but only 12% of respondents identified them as an investment priority. In Europe, the largest volume growth was in proxy events, yet investment spend is the priority for just 2% of respondents. This imbalance underscores a broader theme: despite rising complexity, the fastest‑growing areas often receive the least funding, another sign of the contradictions shaping asset servicing today.
At a market level mandatory events dominate investment spend
Solutions closer to home
Few dispute the value of automation (despite, the need for the expert human eye), however efficiency is not achieved by technology alone. When asked which investments delivered the strongest P&L impact over the last 5 years, the industry was clear: process re-engineering, with notable success in income events and tax reclaims.
Process re‑engineering delivered the highest ROI for 27% of respondents, most notably in income events and tax reclaims, proving that optimisation precedes automation. These findings reveal that improvements often starts within a firm: simplifying workflows, redesigning processes, and embedding automation where it drives the greatest return. The lesson is clear: workflow redesign and targeted automation, rather than wholesale replacement, drive near‑term P&L.
Meanwhile, new technology plays a transformational role for 24% of respondents in proxy voting and 33% for class actions, but its impact is contingent on clean underlying processes. Firms increasingly realise that layering new technology on top of broken processes does not work. They are going back to basics fixing internal issues and complexity first.
"AI agent deployment [is] the key future driver of transformation in asset services, especially for reducing headcount and improving operational efficiency”
Head of Corporate Actions, European Wealth Management firm
Looking ahead, emerging technologies will naturally play a bigger role. Generative AI (9.3%) and APIs (8.6%) rank among the anticipated catalysts for change. Combined with process optimisation and workflow automation, this convergence could deliver the transformation the industry has long sought.
What is the first step? Process reengineering has been the most effective change investment in the last five years
Outsourcing as the shield against volume growth
As volumes surge, outsourcing has become more than a cost lever, it is now a resilience and automation accelerator. By transferring high‑volume, complex functions to specialised partners, organisations gain capacity, consistency, and control without increasing headcount. The findings to our survey support this and reveal an emerging trend in performance between firms that outsource and those that do not.
Where are the protections against volume growth? Outsourcing slows cost growth by a quarter
…with lower error rates
Outsourcing correlates with lower costs compared to non-outsourced peers. While average savings of 1.4% in average system spend and headcount growth may seem modest, firms using outsourced models also report 3% fewer errors and $12K lower average error cost per firm. Together these gains make outsourcing a practical model for expanded capacity and managing rising complexity.
The logic is simple: by outsourcing high-volume, high-complexity activities like proxy voting (53%), class actions (43%) and tax reclaims (32%) firms convert fixed costs, such as headcount, into variable operating costs. This flexibility explains why client demand has become the biggest trigger for investment in tax reclaims. Investors expect faster, more efficient service, and custodians are partnering to deliver it without building entire infrastructures themselves.
The adoption of outsourcing varies by function. Corporate actions remain mostly in‑house (80%), and, despite the positive signal to outsourcing, 68% of tax reclaims follow a similar pattern. Full outsourcing is highest in class actions (23%), and proxy voting (22%). The emergence of hybrid or mixed models, blending internal control with external automation capacity, is a model that effectively broadens asset servicing.
Taking a sector-specific view; brokers lead with 40% fully outsourced and 35% partially outsourced, while custodians (21%) typically opt for partially outsourced model due to regulatory and contractual liability concerns alongside investors (30%).
Looking forward, these flexible approaches could play a pivotal role in standardising the industry, supporting T+1 settlement, and ensuring compliance with evolving regulation. Time will tell whether these hybrid partnerships evolve from tactical relief valves into full‑scale transformation enablers.
Where is outsourcing most viable? Proxy and class actions
