The written conversation

McIntosh: As 2025 draws to a close what do you see as the key macroeconomic themes on the horizon?

Whelan: From a geopolitical standpoint it is clear we are no longer in an era of normalcy or orthodoxy. From the Trump tariffs to other geopolitical shifts we are witnessing some extraordinary events on an almost daily basis which can all have a real impact on our industry.

Ongoing Asian economic development and global demographic change are among other key themes of huge macroeconomic importance which could have profound consequences for global markets.

Economically, the UK is looking to boost competitiveness and drive financial deregulation, with the European Union (EU) on a similar journey. The EU

Savings and Investment Union (SIU) has some huge financial drivers behind it. EU policymakers are looking to the SIU to see if they can mobilize private cash savings to help fund growth and investment.

McIntosh: Do you see any major changes taking place on the technology side?

Whelan: Yes. The sphere of control is shifting. 

AI and digitization are very hot topics, with competitors in a virtual ‘space race’ to become market leaders. We expect to see more friction around cross-border activity in both technology and finance. This growing competitiveness presents a terrific opportunity for our industry - albeit in a race which will see both winners and losers.

McIntosh: We have certainly seen a lot of rapid change in recent times. ISSA recently revisited its 2020 Future of Securities Services paper, updating the view out to 2030. Which of the themes that Adrian has highlighted were absent or low priority in the landscape of 2025 and what has that shift meant for ISSA members?

Zeeb: On eight of the ten ‘forces’ outlined in our2020 paper, ISSA did well and the themes that Adrian highlighted were in our paper and continue to be a focus. However, there were two where the trend went in a different direction and one that we missed altogether.

The first trend to go in a different direction was industry disruption by big tech. ISSA had anticipated this would be driven by new technology players entering the market as competitors or through acquisition. However, instead we have seen more partnerships developing between supply-side platforms (SSPs) and Big Tech. The second was that, post COVID, we anticipated a looser monetary policy – with low or negative interest rates and expansionary fiscal policy – with tax breaks and / or government stimulus. However, this did not happen due, in part, to geopolitical events such as the Russia / Ukraine war.

The one trend that we missed altogether was accelerated settlement. At the time of the 2020 paper, issue of accelerating settlement of equities trades was not at the forefront of industry discussions

McIntosh: Can you talk a little bit about investment spend and the budgeting cycle in custody on areas such as AI and other business transformation tools?

O’Grady: It is critical that these types of technologies are considered when companies are looking at how to build out custody investments and roadmaps. All the factors we have discussed - whether geopolitics, regulations or managing risk and control - will end up touching the custody space at some point in time.

From a custody platform perspective, we must look at every practical option to maintain pace with change while increasing efficiency and scale not only for ourselves but also our clients. While we need new technologies in our business we also need to carefully consider the best use cases for specific technologies. This means understanding what the genuine issues are in custody and what we should focus on. Do specific problems require an upgrade to an existing legacy platform, or is a new solution required? Automation and leveraging technologies to achieve automation and scale are key.

At BBH we are building in capabilities such as anomaly detection to identify risks and fix potential errors before they become a problem. New technologies will create many new other opportunities. It is important that we examine the potential of AI to explore the development of new and diverse types of services that didn’t exist before. That said, no organization can harness the full potential of AI while constrained by outdated platforms. Modernization is the gateway to real transformation.

McIntosh: As these technologies move from being very speculative to being rapidly adopted, where do you see opportunities for collaboration in the market so firms are not just working in isolation?

Johnson: We must take time to consider what we really want and how we go about creating solutions. From a digital asset and DLT standpoint I believe we are finally reaching a tipping point after some false starts. Expectations are riding high on the DLT side, despite some project cancellations in recent years and, as an industry, we must learn from our mistakes. I personally believe collaboration and mutualization can achieve more than companies can by simply competing against each other in this space.

McIntosh: How important are evolving technologies such as AI to the custody business?

Johnson: In this business, clearing, custody and asset servicing are not rocket science. While service providers are unlikely to win new clients by having a faster back-office system they may win those clients by having more differentiated services. This is where it gets both interesting and exciting. The industry has been able to free up capital in recent years, allowing us to explore areas such as real time data, AI and the ability to use tokenized services to set up new funds. Partnering with others in this area should allow firms to be quicker off the mark in terms of delivering innovative market solutions.

McIntosh: How are these seismic changes influencing the way regulators think about evolving risk frameworks?

Whelan: We see European regulators looking for their economies and markets to be competitive and grow. While I would agree we are at a tipping point for adoption of some innovative technologies, the rollout of corresponding regulation is lumpy and varies. The US and Asia seem happy for innovation to happen and then apply regulation once novel solutions are made available.

In contrast, European regulators look to frame regulations in advance of the rollout of innovative technologies such as AI and take a quite technocratic approach. For all this, I believe one area that will see rapid change is tokenization. The US Genius Act paves the way for this in America and adoption of tokenization may quickly follow in other regions with corresponding local and national rules. In this rapidly changing environment companies may well find they need to develop strategic partnerships and will have to consider their own interoperability within a newly tokenized ecosystem.

McIntosh: What about the various risks this evolving market will present?

Zeeb: Every time you do something new in the market, new elements of risk are likely to arise. However, there are certain risks that are considered of key concerns for many financial services companies and individuals include regulatory shifts, geopolitical risk, cyber threats and technology risk. 

However, risks can also create opportunities with the chance for firms to help shape regulatory policies as governments consider the financial sector. Additionally, efforts by associations such as ISSA to work across the securities services industry to better understand how the industry as a whole can improve and mitigate risks.

McIntosh: At a wider level there are high hopes for the EU’s SIU. In your view, can it work?

Johnson: Many people really want the EU to make a success of the SIU to unlock Europe’s undoubted potential. But while we talk about European harmonization it hasn’t really happened. I hope the European Commission will resolve some of the long-term barriers to the SIU on tax harmonization and in other areas too such as legal.. From an operational point of view, we can integrate systems and moving to T+1 settlement in Europe could also be a catalyst for operational harmonization across the continent. Let’s look to work more closely together to achieve this!

McIntosh: What about infrastructure changes in the US?

O’Grady: In the custody space we are all very used to new regulations being introduced even if we are not directly involved in them. However, we are starting to see particular risks emerge around systems in terms of security vulnerabilities. While every firm has its own protocols as to how they address these we are starting to see big infrastructure providers like the Depository Trust and Clearing Corporation (DTCC) roll out plans to mature their own systems and make them more secure.

We have seen a recent transformation in DTCC settlement and clearance which is hugely impactful in terms of how we connect with them. Change at DTCC is a massive undertaking and will be hugely impactful for us and our clients. That said, partial settlement is finally to be permitted within the US. This has been a long time coming and certainly helps align with what is already available in the EU.

McIntosh: Everyone is talking more about digital assets. Can you tell us about the evolution you have seen in this space from an ISSA perspective? Are any key themes emerging?

Zeeb: There has been a slow but significant change over the last ten years with traditional centralized models for transacting cash and securities with a strong regulatory oversight and controls having been joined by the advent of digital assets. To date the focus has been in three areas: cryptocurrencies, tokenization of securities (such as collateralization) and native digital assets - with the first two being where the main growth has come from.

As with anything new, concerns have been raised over the risks involved in investing in digital assets. Whilst we have seen a greater level of adoption with the development of regulatory frameworks, the maturity of DLT and increased adoption by institutional investors, there are still hurdles to overcome and adoption is slow.

McIntosh: So there are pros and cons?

Zeeb: Yes, in that every single component and process needs to be mapped out into a digital world. And if you take, say, administering corporate actions, that is not a straightforward process. Digitizing bad existing processes could make them even more problematic so increased automation will require great care and thought. One of the – potentially - brightest spots on the digital side has been the emergence of Stablecoin and the introduction of the US Genius Act which could support increased adoption. If the industry can collaborate and connect in devising solutions in this area, I believe we can make some real progress.