Photo: Brice Lecoustey (à G.) and Ajay Bali (à Dr.), EY Luxembourg Partners

The effectiveness of asset managers relies on asset servicers – custodians, fund administrators, and transfer agents – keeping pace with digital evolution and providing value for money. Delays from servicing partners can lead to operational issues, slower product launches, and gaps in client experience. Asset servicers are therefore under immense pressure to keep up. But, where do they stand in their digitalization journeys? Have they sufficiently invested in transformation and are they reaping the rewards of these investments?

Compounding these challenges are several mergers and acquisitions across the industry. While consolidation can bring scale and efficiency, it often stalls digital initiatives as firms grapple with integrating legacy systems, aligning operating models and harmonizing data. In most cases, the cost and complexity of integration divert attention and resources away from innovation. This, coupled with sustained margin pressure and rising client expectations, make it increasingly difficult for asset servicers to justify and execute large-scale transformations. Yet, failing to transform is not a sustainable option, and successful digitalization can drive long-term cost savings, positioning firms to better serve clients and compete in an increasingly data-driven ecosystem.

Since 2022, EY Luxembourg has been producing a market report on the state of digitalization in the asset servicing industry in Luxembourg, analyzing data across three themes: strategy and organization, customer centricity and operations, and technology and innovation. From a “Basic” level in 2022, to “Advanced” in 2024 and 2025, there has been significant progress in digitalization, but companies continue to face critical challenges in realizing their digital transformation ambitions. Let’s unpack some of the major findings in the 2025 study, and imagine the (short-term) future for the industry.

Strategy and organization

Asset servicers are picking up on the pace of digital strategy and execution. In the research, they are judged on how deeply digital runs through their value chain, how much they’re investing over five years, and whether they lead innovation by process or by product.

Positively, over half (56%) say their digital efforts are fully aligned with corporate strategy, and another 35% are getting close. Centralized in-house digital teams are leading the charge for 40% of firms, while 30% are teaming up with fintechs. But not all is smooth – 14% still suffer from siloed efforts and ad hoc digitalization.

Funding also remains a sticking point. Just 33% have dedicated budgets, and 37% are committing no more than 5% of revenues. Execution gaps are clear too: 41% have only 31–50% of their processes digitalized. Progress is real – but there’s plenty of runway left.

Customer centricity and operations

The degree to which the end-to-end client experience journey is supported by advanced technology, automation and interconnectedness of operational activities, is a useful metric to understand client centricity.

In this year’s research, customer centricity remains stagnant. While 45% emphasize embedding customer insights throughout their organization, only 56% measure customer interactions analytically through periodic reviews. Alarmingly, 12% don’t measure customer experience at all.

Seventy-nine percent (79%) of respondents cite operational inefficiencies as a major issue, while 71% highlight dependency on human resources and lack of standardized processes as key obstacles to a more customer-centric approach. The onboarding experience also remains outdated for many organizations. Almost half (48%) acknowledge their client onboarding processes are still basic, while 61% admit their KPIs are still defined and tracked manually, with no tools for real-time measurement.

Technology and innovation

To what extent does your business make use of emerging technologies and applications? How is “big data” utilized to create efficiencies? Are you still using legacy technology? These are some of the questions asset servicers were asked in the research.

Asset servicers showed notable advancements in technology and innovation sector with increased investments in digitalization. About 74% prioritize modernizing data platforms, and 68% are developing digital products. However, most companies have less than 50% of processes are digitalized. Collaborations with fintechs and external tech providers account for 30% which could hint to an over-reliance on external expertise that may impede full integration into core business processes. In terms of service providers, in 2024 and 2025, Microsoft leads workflow ecosystems, followed by Salesforce at 30%. Even so, we see firms are starting to diversify their digital ecosystems, indicating a shift towards specialized solutions.

So, where to next?

Looking to the future of asset servicing, we are hopeful about a number of initiatives. For one, we anticipate more and more asset servicers to continue to adopt a “digital first” approach, integrating end-to-end solutions rather than just point solutions. This shift transforms asset servicers into entities offering both products and services, impacting pricing models to favor value-based pricing. Establishing a digital office within senior leadership is recommended to balance efficiency with long-term goals, and a budget supporting transformative changes will be crucial.

We expect several asset servicers to invest in data modernization and then monetization, leveraging analytics for new revenue streams, enhancing their value proposition. They will also continue to adjust their digital maturity understanding and gain insights on customers’ service preferences, moving towards a zero-touch digital approach with client platforms central to interactions, such as onboarding and KYC processes.

Increasingly more operational processes will be enabled by Agentic AI (a type of AI that can operate autonomously, i.e., make decisions and execute tasks without human intervention) – starting with internal processes and then further enabling client  interactions This will definitely require standardization of processes and data flows – among others – and will bring  hyper-automation benefits to the companies. We also already see GenAI being used for many processes covering unstructured data and documents and augmenting operational staff to perform tasks faster. Real-time task tracking, KPI measurement, and risk mitigation will be facilitated by operational backend platforms. GenAI platforms, like Copilot, will be used to enhance workflows, ensuring visibility for customers through CRM systems and portals.

Finally, as we have already started seeing, organizational strategies will shift from addressing urgent issues to adopting proactive approaches, with a focus on continuous education and training on emerging technologies, ensuring readiness to adopt new value-adding technologies as they appear.

To read the complete benchmarking report, click here.

Ajay Bali, EY Luxembourg Partner, Technology Consulting Leader

Brice Lecoustey, EY Luxembourg Partner, Asset Servicing Leader