Custody Evolution In the Era of Asset Convergence

The global securities and investment landscape is rapidly evolving as institutional investors prioritize resilience and diversification. Ee Fong Soh, Group Head of Financial Institutions, Securities & Fiduciary Services, Global Transaction Services, DBS Bank, explains that while asset safety is a shared goal, clients seek to achieve it through different approaches across various sectors and markets.

This demand, coupled with technological and regulatory advancements, is leading to a convergence of digital and traditional asset ecosystems, particularly in Asia.

In a recent survey, 83.8% of global financial institutions in Asia named custody as their top priority for digital asset use cases within the next 24 months, making it the leading digital-asset priority compared to the global ranking. Two-track innovation is crucial for custodians to cater to this shift, as digital asset adoption is rising in Asia while traditional asset classes remain the primary contributor to institutional portfolios.

DBS Bank has been innovating in both traditional and digital asset custody, enabling clients to create new efficiencies and growth opportunities.

DBS has been at the forefront of advancements in traditional assets, securing first-mover advantages in regions like China's OTC bond market and becoming the first foreign bank approved as an RMB clearing bank. In digital assets, strategic alliances with firms like Franklin Templeton and Ripple have expanded optionality for clients' diversification needs.

DBS has also introduced innovative solutions such as tokenized money market funds, collateral agent services for crypto trading, and the issuance of tokenized structured notes on public blockchains.

As custodians face mounting demand, they must continue to evolve rapidly. DBS is exploring new initiatives, such as the establishment and expansion of a physical gold ecosystem in Singapore, where they will tokenise, distribute, and manage physical gold tokens entirely in-house. This token will be listed on DBS Digital Exchange (DDEx) and later expanded to Hong Kong.

While numerous opportunities lie ahead, safety remains paramount, driven by custodians who prioritize trust and asset safeguarding as central promises in both day-to-day operations and innovation processes.