posted on Jan 31, 2014 by Andy Efstathiou
J.P. Morgan has decided to exit its unprofitable U.K. fund transfer agency business. The exit will take place in 2014. The impact of the exit will be that funds currently with administration fee pricing as low as 0.04% will face pricing closer to 0.15 % (an increase of 375).
Transfer agency services include:
- Recording changes in share ownership
- Canceling and issuing share certificates to reflect changes in ownership
- Replacing lost or stolen certificates
This exit reflects a change that is just starting in the financial services marketplace. Banks are now evaluating their businesses and deciding which ones to double down on, and which ones to exit.The U.K. market is very competitive in capital markets BPO services. J.P. Morgan is exiting the U.K. market for transfer agency services, but for now will remain in other European markets.
Over time, the change will raise prices somewhat (but not often by as much as in this case). However, the primary change will be to cede large parts of the market to process specialists (such as the process based capital markets BPO vendors profiled by NelsonHall recently). We expect bank operations to shrink significantly over the next five years with corresponding growth in BPO.