WWW and the Global Custody Business

The WWW and the Global Custody Business
...One Year Later

What a difference a year makes! For a second year, Buttonwood's Global Custody Survey explored the use of the Internet WWW for the global securities business. Fifteen global custodians - with corporate operations located in the U.S., Canada, and Europe - were polled.

Last year, we were somewhat puzzled by the returns - the Internet did not seem to gain the attention of the global custodian community. Our survey questionnaire - over 20 pages in length - was available for distribution to participating custodians by Internet email, but only two custodians of eighteen, admitted to having email addresses.

This year, the use of the Net for the survey was very different. The questionnaire was available on Buttonwood's Web site - with appropriate security of course - for file download by participating custodians. We are happy to report that most custodians used the Internet to download the questionnaire and also, upload completed questionnaires - a savings of time and communications cost for all involved. Alas, few exceptions were encountered - one overzealous LAN administrator prohibited file downloads from the Net while another custodian did not have access to the Internet. Overall, use of the Internet for our 4th annual survey was a huge success.

Survey Results

What is the current state of the Net development by the global custodian community? For starters, last year only two custodians had running Web sites, while today fourteen of fifteen custodians have Web sites.

"Today, the Internet is best suited to time-sensitive information that is in the public domain and not client-specific. That said, Royal Trust is solving security concerns to support the safe transmission of instructions and account details for both cash and securities. The Net could well displace proprietary systems--eventually," says Mary Taylor, Vice President GSS Sales and Client Relations, Royal Trust. The results of our survey tend to support Taylor's observation. The most popular applications placed on the Net by the custodians are in the public-domain

Survey results were categorized by three levels: Corporate Publishing, Customer Account Services, and Electronic Commerce At the first level - Corporate Publishing - most custodians had "glossy brochure" type applications, i.e. descriptions of the corporate bank, services, products; corporate news stories; and a few advertising programs. A handful of banks are using the Net for job recruitment, economics research reports and even entertainment (sports program).

The commercial use of the Internet is in its infancy - less than two years old in most cases. Although an in-depth marketing analysis of client usage may be a stretch at this time, a simple observation is quite clear: the global custodians are investing heavily in the new technology, their clients are quickly coming up the learning curve, and usage of the Net is expected to explode over the next several years!

The complete article - covers Customer Account Services, Electronic Commerce, The Real Challenges of Commercializing the Net, and Field of Dreams? - is available to Yearbook subscribers at The WWW and the Global Custody Business ...One Year Later.