How are asset managers’ priorities evolving in 2025, particularly around cash management and yield maximisation? 
Asset managers are under greater scrutiny to optimise costs in their operations. There’s a strong push to turn fixed costs into variable ones by automating and streamlining processes. Outsourcing certain functions has become an appealing approach.
At MUFG Investor Services, we provide a broad spectrum of services – from basic transactional offerings like opening bank accounts and making payments to more advanced solutions that support approval workflows and integrate with treasury systems and accounting platforms.
For example, we can extract and process invoice data directly from source systems. It’s really about how much of the treasury function asset managers want to outsource to focus on their core value – generating returns. The ability to shift from simple transactional services to comprehensive treasury solutions is an opportunity for the industry.
Beyond cost savings, yield enhancement is a critical focus. With rising interest rates, asset managers are paying more attention to maximising the yield on their cash. Placing working capital in the right places at the right times is essential. This focus on cash efficiency serves dual purposes: Reducing costs and increasing revenue through better yield management.
Risk reduction is another priority. The US regional banking crisis highlighted the dangers of concentration risk, prompting institutions to reconsider where they hold their money. Asset managers are exploring diversified options, and sweeping cash into dedicated bank accounts with large credit institutions to mitigate risk.
Historically, operational ease often dictated cash placement, with many asset managers choosing single providers or fintechs for their simplicity. However, this has sometimes led to heightened risks. Now, there’s growing emphasis on removing concentration risk while still achieving operational efficiency.
We differentiate ourselves by offering integrated banking services that reduce operational burdens, enhance yield through access to a robust balance sheet and strong credit rating, and provide tools to better manage concentration risk. It’s about giving asset managers the flexibility and tools to optimise their treasury and cash management strategies.
Why is MUFG Investor Services expanding its banking and payment services?
The decision to expand Banking and Payment services within MUFG Investor Services stems from the unique strengths of an asset servicing business, which are highly synergistic with the requirements for delivering comprehensive banking and treasury solutions.
Asset servicing firms, like MUFG Investor Services, excel in operational excellence. For decades, we’ve been trusted to handle core elements of clients’ operations with precision and reliability. This deep integration with clients allows us to fully understand their challenges, not just from a financial perspective but from an end-to-end operational standpoint.
On top of this, MUFG Investor Services is a division of Mitsubishi UFJ Financial Group, Inc. (MUFG), one of the largest banks in the world, which brings significant advantages. We have the regulatory licenses, balance sheet strength, and credit standing to offer robust banking services. This combination enables us to blend operational understanding with the ability to provide tailored banking solutions that address clients’ complex needs.
Another key differentiator is our technology capabilities. We’ve invested heavily in cutting-edge cloud technologies and dedicated teams, enabling us to collaborate with our clients and build bespoke solutions. This commitment to co-developing technology ensures that the services we provide are not only innovative but also closely aligned with our clients’ requirements.
What sets us apart from traditional banks is our ability to operate beyond the limitations of a single-dealer model. Traditional banks tend to focus solely on their own accounts and infrastructure. By contrast, asset managers typically deal with multiple banks, custodians, and prime brokers, which creates a need for integrated solutions that manage these diverse relationships efficiently.
MUFG Investor Services is uniquely positioned to act as an aggregator, helping clients to manage funds and workflows across various providers. Unlike treasury or accounting platforms that lack banking capabilities, we can embed ourselves directly into the flow of funds.
This combination of operational expertise, banking capabilities, and technology innovation positions us to meet asset managers’ evolving needs more effectively than traditional banks or standalone platforms.
How does the MUFG Investor Services’ Open Treasury Hub streamline payment management for asset managers?
The Open Treasury Hub tackles the primary challenge asset managers face: Fragmented solutions that result in inconsistent experiences across payment workflows, accounts, and treasury activities. By centralising these processes, we provide a unified platform that delivers a seamless and consistent experience.
The hub allows clients to execute payments across multiple banks and optimise those payments through various channels. For instance, clients can use their existing bank for transactions or access alternative rails. These rails can transfer funds from one bank, convert them into the required currency, and ensure efficient delivery.
We describe it as an open architecture or marketplace because it doesn’t matter where the funds are held. We can open bank accounts for clients quickly in more than 20 currencies—and make payments in 120 currencies—and the hub also supports external banking relationships.
For example, if a client needs a specific bank account in a unique jurisdiction for a particular market need, we can integrate with partner banks to provide the necessary services. This flexibility and connectivity make the Open Treasury Hub an effective aggregator for clients.
One area where this is especially impactful is international payments and sourcing liquidity. Traditionally, clients had two options: Rely solely on their bank, often at non-competitive rates, or establish multiple relationships and trading lines, which can be complex and burdensome. Our hub eliminates this friction.
When a client needs to make a foreign currency payment say in Euros, we use a panel of banks, including MUFG and other liquidity providers, to source the best FX rate. By leveraging our trading lines and relationships, we ensure competitive pricing and meet best execution standards.
This centralisation offers clients unparalleled choice and optimisation opportunities. Whether it’s accessing liquidity, achieving better FX rates, or using local payment rails, the Open Treasury Hub consolidates and simplifies these processes. Through a single relationship with us, clients gain access to a broad spectrum of banking solutions, fundamentally transforming how they manage payments and treasury activities.
What new services will MUFG Investor Services launch in 2025? And what other innovations are planned for MUFG Investor Services’ banking and payments business?
We’ve been investing heavily in the banking and payment space, focusing on the right expertise and technology to revamp our payment solutions. We’ve completely overhauled the infrastructure, particularly to streamline the payment process. This includes improving how we ingest payment instructions through different channels, like web services host-to-host, and Swift.
We’ve also enhanced the client interface. Many clients told us they wanted a simpler, more intuitive way to manage payments and view their positions. To address this, we’ve launched a new banking portal that centralises payments, allowing clients to manage all their payments from one place.
This new platform isn’t limited to MUFG Investor Services’ payments alone; clients can use it for any type of payment. We’ve already released several features in the second half of 2024 with more to come, especially around automation, beneficiary management, and payment lifecycle management. In the first quarter, we plan to roll out additional beneficiary management automation, as well as enhance security and efficiency.
We’ve also made significant strides in fraud controls and security, integrating advanced features to protect our clients. For instance, we now offer callback services, which provide an additional layer of control when introducing new beneficiaries for payment. This ensures that payments are not intercepted and adds another level of security for clients.
Additionally, we’ve improved validation layers within our payment systems to identify errors early. One common issue clients face is submitting payments that later fail due to missing or incorrect information. With our real-time validation, we can notify clients immediately if something is wrong, helping avoid delays and improving the overall payment experience.
We’re also working on expanding the range of payment channels available. In addition to high-value payments via Swift, we’re enhancing our networks to include alternative low value rails across borders. This is scheduled to be rolled out in the first half of 2025 as part of our intelligent payments’ engine. This service will allow us to automatically choose the most suitable payment route for clients, based on criteria including speed, cost, or payment finality.
Looking ahead, we’re also excited about an upcoming innovation for account management. Starting in 2025, we’ll introduce the ability to open a single bank account that can have multiple addresses across different jurisdictions.
This means that investment managers with global investors will no longer need to open separate accounts for each country. Instead, they can provide investors with local account details, like an IBAN for Singapore, a UK sort code and account number, or a US ACH routing number, all through one account.
This will simplify global banking operations and reduce the complexity and cost of managing multiple accounts, which has traditionally been a challenge for financial institutions. This is something we’ve seen in the consumer space with digital banking, and we’re now bringing it to the financial institutions sector.