JPMorgan Chase & Co.’s U.S. fund servicing arm says it plans to add scale and services in an effort to build its assets under custody.
JPMorgan Worldwide Securities Services, which provides custody, accounting, investment operations, and administrative services for U.S. mutual fund companies, plans to broaden and deepen its service menu in order to add to its $11.5 trillion of assets under custody.
Mark Kelley, who the company announced Thursday had been hired to lead and expand the division, said it would announce in coming months that it has added a couple of “key” U.S. mutual fund complexes as customers.
“This business is about scale,” he said. “You have to have the scale in order to compete. You have to have the scale to build the right technology to create an efficient processing platform.”
The division has increased its assets under custody by 4.3% since mid-October last year. The custody total does not reflect the $700 billion of business added in July when it was chosen by Freddie Mac to supply transaction processing and record keeping services for its portfolio of mortgage-backed securities and short-term assets.
JPMorgan plans to add customers and offer more services to existing customers, Mr. Kelley said.
“In terms of our custody business, we have done quite well, in terms of growth,” he said. “But as for our service offerings, including fund accounting, fund administration, and other middle-office services, we want to get that growth moving a little faster.”
The company will add offerings like transfer agency services in order to bolster business.
Analysts said JPMorgan is competing with companies like Bank of New York’s Pershing division and Fidelity Investments to sell back-office services. JPMorgan Worldwide Securities Services has spent $600 million on technology in the past year, Mr. Kelley said, and improvements of its asset-servicing platform are expected to fuel growth.
Mr. Kelley, 44, was a managing director and regional business head in Citigroup Inc.’s securities and fund services division for Europe, the Middle East, and Africa. From its base in London, he managed custody and clearing services and the fund accounting and fund administration businesses.
His 10 years in London showed him a rising trend of asset managers’ and investment managers’ outsourcing their middle- and back-office services, he said. Though this trend has not been so prominent in the United States, he said, he expects it to take hold in the next few years.
There have already been some outsourcing deals in the United States, he said, “and there will be some fairly large ones in the next couple of years. We want to be positioned to grab our fair share, or greater, of that opportunity.”
