Value-Added Middle Office Outsourcing Bucking the Squeeze on Fees?

Citisoft's Tom Secaur is quoted in recent Ignites coverage on back office asset servicing fees and trends.  Recent industry forecasts and provider announcements have set the stage for a rise in asset servicing fees after years of declines but one area that asset servicers are enjoying healthy margins are in value-added middle office services. From the article:

The growing number of fund firms looking to outsource parts or all of their middle-office operations is also likely to help the banks. Consultants say the wave of projects should continue to swell in 2012, and banks will try to appeal to particular pain points such as derivatives processing, collateral management and global fund accounting and administration services.

“Service providers are looking to build differentiation into their offering by offering more high-touch service, functions [that] five, six, seven years ago no one was looking to outsource,” says Tom Secaur, chief operating officer at Citisoft.

But fund companies should go into projects carefully and understand where they stand in line for conversion, sources say. While banks are improving their processes and technology to get middle-office jobs completed faster, most service providers can do only a few projects in a given year. The time line may be too long for some firms with immediate needs, they say.

“But when push comes to shove I can’t imagine too many service providers walking away from outsourcing deals, so they will get them done even if it means spending more on external resources,” Secaur says.

For compete coverage from Ignites, click here (subscription required).