The global middle office outsourcing market is estimated to account US$ 5.0 Bn in 2018 and is expected to grow at a CAGR of 7.8% during the forecast period 2019 - 2027, to account to US$ 9.8 Bn by 2027.
"Middle office" refers to the post-trade and pre-settlement departments of an organization. With companies using multiple custodians, brokers, and other third-party interfaces due to different systems, straight-through processing automation is difficult. Therefore, increased manual intervention is necessary to complete transactions. Another aspect that increases the difficulty of the production is the increased use of less liquid asset classes by hedge funds. This increased the need for cohesive middle office space as the front office is heavily dependent for its investment decisions on accurate data from the middle office. Over the past decade, large players such as State Street, Citigroup, JPMC, and BNYM made significant investments in the outsourcing field of middle office and strengthened their service offerings. These factors are significantly contributing to the middle office outsourcing market.
Various analytics services are being adopted by the firms for transforming the unstructured data gathered from various online channels to structured data in order to gain meaningful insights. “Predictive analytics” is one of the major advanced analytics tools used to understand and code the behavior pattern of business and consumers. For increasing revenue at various organizational levels, such as stock exchange, private equity management, investment baking, clearing house companies, and hedge funding companies, analytical tools help numerous end users. This has encouraged most of the companies to adopt strategy of outsourcing middle office operations, which significantly reduces operational costs of the vendors and contribute towards the growth of middle office outsourcing market.
The optimization of middle office operations, such as reconciliation reporting and billing, portfolio accounting, staff augmentation, plays a crucial role in financial institutions as outsourcing helps in overcoming issues related to workflow disruption and also safeguards from wrong reporting. Thus, the emergence of automation is among the key trends in the global middle office outsourcing market. It eliminates unnecessary processes, reduces operational risks, provides valuable insights, and cuts down cost. Furthermore, cloud-based solutions, such as the “SaaS middle office model,” are being increasingly adopted for decreasing operational costs. The emergence of cloud solutions and increasing automation are likely to drive the middle office outsourcing market in the coming future. Cloud-based middle office solutions help in enhancing operational flexibility by providing frequent upgrades and enhancements, on-demand scalability, and extensibility as firms launch new and innovative products.
The middle office outsourcing market is segmented into five major regions- North America, Europe, APAC, MEA, and South America. In 2018, North America led the global middle office outsourcing market with a share of more than 40% share, followed by Europe and APAC. During the forecast period, other regions such as MEA and SAM are also expected to offer ample growth opportunities for market players operating in the middle office outsourcing market. In 2018, there was a significant market share in the investment banking and management segment, and this trend is expected to continue over the forecast period. Factors such as increased operational complexity, improved regulatory compliance, lower margins, and the advent of technological innovations are driving the growth of investment banking and management segment. Based on offering, the middle office outsourcing market is segmented into portfolio management, trade management, and others. Portfolio management segment held the largest market share in 2018 and is followed by trade management, and others segment. Portfolio management segment is expected to grow at the highest CAGR during the forecast period of middle office outsourcing market.
The overall middle office outsourcing market size has been derived using both primary and secondary source. The research process begins with exhaustive secondary research using internal and external sources to obtain qualitative and quantitative information related to the middle office outsourcing market. Also, multiple primary interviews were conducted with industry participants and commentators to validate data and analysis. The participants who typically take part in such a process include industry expert such as VPs, business development managers, market intelligence managers, and national sales managers, and external consultants such as valuation experts, research analysts, and key opinion leaders specializing in the middle office outsourcing market.
Reasons to Buy
"Middle office" refers to the post-trade and pre-settlement departments of an organization. With companies using multiple custodians, brokers, and other third-party interfaces due to different systems, straight-through processing automation is difficult. Therefore, increased manual intervention is necessary to complete transactions. Another aspect that increases the difficulty of the production is the increased use of less liquid asset classes by hedge funds. This increased the need for cohesive middle office space as the front office is heavily dependent for its investment decisions on accurate data from the middle office. Over the past decade, large players such as State Street, Citigroup, JPMC, and BNYM made significant investments in the outsourcing field of middle office and strengthened their service offerings. These factors are significantly contributing to the middle office outsourcing market.
Various analytics services are being adopted by the firms for transforming the unstructured data gathered from various online channels to structured data in order to gain meaningful insights. “Predictive analytics” is one of the major advanced analytics tools used to understand and code the behavior pattern of business and consumers. For increasing revenue at various organizational levels, such as stock exchange, private equity management, investment baking, clearing house companies, and hedge funding companies, analytical tools help numerous end users. This has encouraged most of the companies to adopt strategy of outsourcing middle office operations, which significantly reduces operational costs of the vendors and contribute towards the growth of middle office outsourcing market.
The optimization of middle office operations, such as reconciliation reporting and billing, portfolio accounting, staff augmentation, plays a crucial role in financial institutions as outsourcing helps in overcoming issues related to workflow disruption and also safeguards from wrong reporting. Thus, the emergence of automation is among the key trends in the global middle office outsourcing market. It eliminates unnecessary processes, reduces operational risks, provides valuable insights, and cuts down cost. Furthermore, cloud-based solutions, such as the “SaaS middle office model,” are being increasingly adopted for decreasing operational costs. The emergence of cloud solutions and increasing automation are likely to drive the middle office outsourcing market in the coming future. Cloud-based middle office solutions help in enhancing operational flexibility by providing frequent upgrades and enhancements, on-demand scalability, and extensibility as firms launch new and innovative products.
The middle office outsourcing market is segmented into five major regions- North America, Europe, APAC, MEA, and South America. In 2018, North America led the global middle office outsourcing market with a share of more than 40% share, followed by Europe and APAC. During the forecast period, other regions such as MEA and SAM are also expected to offer ample growth opportunities for market players operating in the middle office outsourcing market. In 2018, there was a significant market share in the investment banking and management segment, and this trend is expected to continue over the forecast period. Factors such as increased operational complexity, improved regulatory compliance, lower margins, and the advent of technological innovations are driving the growth of investment banking and management segment. Based on offering, the middle office outsourcing market is segmented into portfolio management, trade management, and others. Portfolio management segment held the largest market share in 2018 and is followed by trade management, and others segment. Portfolio management segment is expected to grow at the highest CAGR during the forecast period of middle office outsourcing market.
The overall middle office outsourcing market size has been derived using both primary and secondary source. The research process begins with exhaustive secondary research using internal and external sources to obtain qualitative and quantitative information related to the middle office outsourcing market. Also, multiple primary interviews were conducted with industry participants and commentators to validate data and analysis. The participants who typically take part in such a process include industry expert such as VPs, business development managers, market intelligence managers, and national sales managers, and external consultants such as valuation experts, research analysts, and key opinion leaders specializing in the middle office outsourcing market.
Reasons to Buy
- Save and reduce time carrying out entry-level research by identifying the growth, size, leading players and segments in the global middle office outsourcing market.
- Highlights key business priorities in order to assist companies to realign their business strategies
- The key findings and recommendations highlight crucial progressive industry trends in the global middle office outsourcing market, thereby allowing players across the value chain to develop effective long-term strategies
- Develop/modify business expansion plans by using substantial growth offering developed and emerging markets
- Scrutinize in-depth global market trends and outlook coupled with the factors driving the market, as well as those hindering it
- Enhance the decision-making process by understanding the strategies that underpin commercial interest with respect to client products, segmentation, pricing and distribution
Table of Contents
1. Introduction
3. Research Methodology
4. Middle Office Outsourcing Market Landscape
5. Middle Office Outsourcing Market - Key Industry Dynamics
6. Middle Office Outsourcing Market - Global Market Analysis
7. Middle Office Outsourcing Market - By Offering
8. Middle Office Outsourcing Market Analysis - By End Use
9. Middle Office Outsourcing Market - Geographic Analysis
10. Middle Office Outsourcing Market- Industry Landscape
11. Middle Office Outsourcing Market- Company Profiles
12. Appendix
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Adepa Global Services S.A.
- Brown Brothers Harriman
- Caceis
- Hedgeguard
- JPMorgan Chase & Co.
- Northern Trust Corporation
- Societe Generale Securities Services
- SS&C Technologies, Inc.
- State Street Corporation
- The Bank of New York Mellon Corporation
