More assets, less room for inefficiency

Luxembourg’s depositary industry has encouraging numbers to report. According to the ABBL–CSSF Depositary Banking and Custodian Services Survey 2026, assets under deposit rose by around 10% in 2025, while assets under custody increased by 8% to €4.17 trillion.

At the same time, the Luxembourg-based workforce remained broadly stable.

More assets are therefore being serviced without a corresponding increase in headcount. On the surface, that suggests an industry becoming more productive. Yet it also conceals substantial differences in the amount of work required to safeguard those assets.

A billion euros invested in a conventional securities portfolio and a billion euros spread across private investments, holding companies and complex ownership structures generate very different operational demands.

At the ABBL’s annual Depositary Banking Cluster conference, the discussion repeatedly returned to this relationship between growth, complexity and efficiency.

Growth is changing shape

Bob Schaminé of CACEIS described a market that continues to expand, supported by securities-market performance and growth in alternative investments.

Real estate remains more challenging, reflecting pressure on underlying asset values, while ELTIFs and ETFs continue to open new avenues for development.

Luxembourg’s broad range of fund structures remains an important advantage. However, each addition to the product mix also creates new requirements for the institutions servicing those funds.

Faster subscriptions and redemptions, unfamiliar asset classes and more elaborate investment structures all have consequences for systems, controls and expertise.

Marc Marly of Alpha FMC highlighted active ETFs as one area to watch. They still represent a relatively small share of the European ETF market, but growing interest creates opportunities for Luxembourg and additional demands on its service providers.

Digital assets add another layer of complexity. Their current footprint remains limited, but their implications already extend to asset classification, wallet management, custody infrastructure and depositary oversight.

Growth is therefore changing not only the volume of work, but also its nature.

The price of being accommodating

A separate Deloitte benchmarking exercise, presented by Sergio Venti, helps explain why institutions can achieve very different levels of operational efficiency.

The comparison covered 12 selected participants, with efforts made to ensure that activity and staffing data were as comparable as possible.

Two factors stood out: product mix and the complexity of the operating model.

A depositary servicing more complex alternative funds inevitably takes on additional work. The same applies to institutions choosing to interact with a larger number of external fund administrators and managers.

Each relationship introduces additional processes, information flows and interfaces that need to be understood and maintained.

Venti described this as an “efficiency premium”: commercial flexibility has an operational cost.

Measures such as assets or sub-funds per employee therefore need to be interpreted with care. They reflect not only efficiency, but also strategic choices about which clients to serve and how to serve them.

Offshoring does not provide an automatic solution either. Deloitte’s exercise found no particularly strong relationship between outsourcing and operational efficiency, although outsourcing may still have a significant impact on costs.

Moving activities elsewhere can create its own coordination and oversight requirements.

An awkward moment for technology

Vincent Willem of Banque de Luxembourg placed these operational questions in a familiar commercial context: persistent pressure on fees and a continuous search for efficiency.

Technology investment takes place within that constraint.

Some institutions are pursuing integrated platforms covering depositary activities from end to end. Others continue to rely on combinations of specialist and legacy applications, with varying levels of connectivity.

Within universal banks, depositary projects must also compete with other business lines for investment budgets and IT capacity.

AI has arrived at an awkward point in this technology cycle.

Employees increasingly see tools capable of generating useful results in days, while institutional implementation typically follows much longer development and governance processes. Expectations are moving faster than infrastructure.

The near-term opportunities are nevertheless practical.

Venti estimated that information acquisition, including chasing, extracting, cleaning and correcting data, can absorb around half of a depositary officer’s time.

Extracting structured information from a prospectus is one example where AI could reduce preparatory work and allow specialists to devote more time to reviewing information and exercising judgement.

More ambitious applications could eventually help connect fragmented environments across record-keeping, oversight and cash-flow monitoring. For now, however, these remain experiments rather than established operating models.