The head of Fidelity Investments' clearing services unit says he believes this year will be another strong one for the Boston company in the bank channel as more banks look to broaden their investment services offerings.

National Financial had $330 billion of custodied assets at Dec. 31, up 41.4% from the year earlier. Malo said the company had $18.8 billion of net inflows, added $40 billion in its July purchase of Correspondent Services Corp. from UBS Financial Services, and realized another $37.8 billion in market appreciation.

Malo predicts the firm’s market share in outsourced clearing services will jump from 9% to 16% in the next three years, after gaining 2% last year. New technology is expected to help National Financial develop its position in this competitive marketplace. On Thursday, the company announced that it would strengthen its Streetscape platform through a series of enhancements of its browser-based broker workstation. National Financial also announced it will launch a desktop workstation this year.

"Pershing [owned by Bank of New York Co.] is still the leader in terms of the number of clients it has," he said, "and Bear Stearns is a strong full-service shop. Fidelity has always been more service-oriented, traditionally. Customers would indicate that Fidelity offers a high level of service. ... Fidelity is well-positioned to grow."

Malo said his company will consider deals but is excited by the potential for organic growth.

Brokerage capabilities are a growing necessity among banks in order to remain competitive. Matt Beinfang, a senior analyst at the retail brokerage and investing group of TowerGroup in Needham, Mass., said brokerage is not a core business at most banks and this makes outsourcing crucial. Fidelity faces stiff competition in this market, he said.
"The bank marketplace is growing, and we are in a position to capitalize on that growth," said Norman Malo, the president of National Financial. "Banks want to be more full-service. The bank market is our sweet spot." Malo said National Financial has a 48% share of the bank clearing market. He said he already plans to announce the addition of "major" bank customers, one in February and another in May.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.