Developing an optimal custodian relationship management strategy

Abstract

Global custodians, as service industry participants, depend for their survival on the quality of their people and on their relationship approach. This paper argues that relying upon the interpersonal skills of individual relationship managers without a formal process for relationship management exposes the relationship to significant risk and reduces an organisation's opportunity for differentiation. In the global custody business, relationship management is considered an art by most of its practitioners. This paper argues that it is more science than art, requiring a disciplined and structured approach in addition to the interpersonal skills that are necessary in any front-line client role. This structured approach assumes that a relationship plan is invoked, based on an understanding of the degree to which the supplier organisation wishes to engage with its customer, and that the organisation executes against this plan. This planning process is specifically intended to avoid margin erosion over the life of the client relationship and to provide maximum longevity. The decision on depth of engagement can be driven by tiering the client base towards better alignment of resources with revenues, and with the supplier management capacity of the client.