Global Custody Pro - 12 September 2025

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Welcome to Global Custody Pro, read by custody professionals like you. I'm Brennan McDonald, Managing Editor. I write about the global custody industry, having spent over 12 years in financial services, including working at a global custody bank. An AI voice reads the audio version of this newsletter. Have feedback? Just reply to this email or connect with us on LinkedIn.

Table of Contents

• 🌏 Global Custody News

  • Northern Trust Targets $200M+ Productivity Savings

  • BNY Targets Mid-30s Margins Through Platform Tran …

  • State Street Targets Upper-End Fee Growth

• 🚀 Digital Asset News

  • Binance, Franklin Templeton Partner on Digital Ass …

  • Nasdaq Files for Tokenised Securities Trading

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🌏 Global Custody News

Northern Trust Targets $200M+ Productivity Savings

Northern Trust Corporation executives outlined cost-cutting and growth initiatives at the Barclays Global Financial Services Conference, targeting over $200 million in productivity savings for 2025 with a higher target for 2026. Chief Operating Officer Peter Cherecwich said approximately 75% of the savings would be sustainable through permanent workforce reductions and vendor consolidation, noting the company had already reduced third-party vendors by 10% and increased management span of control by 22% year-to-date.

The custody bank is restructuring operations under a "one Northern Trust" model that breaks down silos between business units, with Cherecwich highlighting that new asset servicing business won in the first half of 2025 carried margins 470 basis points better than 2024 wins. Chief Financial Officer David Fox said the company maintains its less than 5% expense growth target for 2025 despite currency headwinds, while net interest income rose 16% year-over-year in Q2 to record levels on a deposit base of $122 billion.

Looking ahead, Fox emphasised growth opportunities in wealth management and alternatives, where private capital assets have doubled over five years and the company holds 60% market share in UK liquid alternative funds. The executives defended Northern Trust's independence following media reports of merger interest, with Fox stating management has "a high degree of confidence" in hitting financial targets under the current structure while Cherecwich argued the firm's size provides a "sweet spot" for rapid technology implementation including AI tools that are already saving developers 31% of their time.

BNY Targets Mid-30s Margins Through Platform Transformation

BNY Mellon is targeting sustained mid-30s pre-tax margins and mid-20s return on tangible common equity through its platform transformation strategy, with CFO Dermot McDonogh highlighting over 400 basis points of positive operating leverage in the first half of 2025 during an investor conference. The custody bank posted its first two record sales quarters in company history following the implementation of a unified commercial model under Chief Commercial Officer Katinka Wollstrom, while maintaining organic growth around 3% and guiding to high single-digit net interest income growth for the full year.

The firm's platform operating model, which consolidates previously siloed operations across businesses, has reduced costs while improving client service by eliminating duplicate processes in areas like KYC onboarding and loan servicing. McDonogh noted that three years ago, clients opening accounts with multiple divisions would need to provide documentation three times, whereas now the process is unified. The company has also embraced artificial intelligence comprehensively, with 97% of global employees trained on AI tools and over 100 AI activities currently in production, ranging from payment processing to code generation.

Looking ahead, BNY Mellon continues to screen acquisition opportunities with a high bar focused on capabilities rather than size, following its Archer acquisition in late 2024. The firm is positioning for growth in private markets and digital assets, having established partnerships with Circle, Société Générale, and Ripple for stablecoin initiatives, though McDonogh acknowledged these aren't yet material revenue contributors. The company plans to revisit its medium-term financial targets in January 2026, three years after they were initially set.

State Street Targets Upper-End Fee Growth

State Street Corporation expects fee revenue growth to exceed its original 2025 guidance, driven by market momentum and core business strength across all divisions, according to CFO John Woods at an investor conference. Woods, who joined the company 12 days prior to the conference, said fee revenue should come in "at or slightly above" the upper end of the 5-7% guidance range, while net interest income would remain roughly flat.

The company's Investment Services division, which represents more than two-thirds of State Street's overall business, has shown strong momentum under President Joerg Ambrosius. Ambrosius said the division generated $145 million in Q2 sales alone – matching total 2020 sales – and maintains a record backlog of $444 million. Private markets servicing revenue grew 19% year-over-year and now represents 10% of overall fee revenue, which Ambrosius identified as a key growth driver.

State Street is expanding into new areas including wealth servicing through its partnership with Apex Group and digital assets, where it became the first third-party custodian connected to JPMorgan's digital asset platform. Woods emphasized the company maintains a "high bar" for M&A, focusing on strategic partnerships that accelerate its roadmap rather than reacting to competitor consolidation.

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🚀 Digital Asset News

Binance, Franklin Templeton Partner on Digital Assets

Binance, the world's largest cryptocurrency exchange by trading volume, and Franklin Templeton, which manages $1.6 trillion in assets, announced a collaboration to build digital asset initiatives and solutions for a broad range of investors. The partnership will explore combining Franklin Templeton's expertise in compliant tokenisation of securities with Binance's global trading infrastructure and investor reach.

The collaboration represents a significant bridge between traditional finance and cryptocurrency markets, with both firms positioning blockchain technology as an opportunity to reimagine legacy financial systems rather than replace them. Sandy Kaul, EVP and Head of Innovation at Franklin Templeton, said the partnership is "essential to accelerating adoption" as digital tools move from "the fringes to the financial mainstream."

Roger Bayston, EVP and Head of Digital Assets at Franklin Templeton, indicated the partnership aims to take tokenisation "from concept to practice" for clients, targeting efficiencies in settlement, collateral management and portfolio construction. Catherine Chen, Head of VIP & Institutional at Binance, said the collaboration furthers the exchange's commitment to bridge crypto with traditional capital markets.

Nasdaq Files for Tokenised Securities Trading

Nasdaq has filed with the U.S. Securities and Exchange Commission to facilitate trading of tokenised securities on the Nasdaq Stock Market, marking a significant step toward integrating blockchain technology into traditional U.S. equities markets. Nasdaq President Tal Cohen announced the filing on September 9, stating the approach would ensure tokenised securities trade as regular securities while maintaining existing investor protections and market stability.

The proposal aims to capture blockchain technology benefits including reduced friction, accelerated settlement times, and improved capital efficiency without replacing the regulatory frameworks and infrastructure that have made U.S. equities markets the most liquid and resilient globally. Cohen emphasised that existing financial institutions, including clearing houses and regulated custodians, would continue playing critical roles in ensuring fairness and investor protection across the trade lifecycle.

Nasdaq indicated it would work with both existing and new infrastructure providers to develop capabilities for shortened settlement cycles and modernised proxy voting while maintaining market trust. Cohen characterised the filing as "an early step" in Nasdaq's journey to responsibly integrate digital assets technology, noting that successful transformation must be "grounded in investor-first principles" to build markets that are "not just more efficient—but fundamentally better."

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