Philadelphia-based SEI Investments is best known for being a manager of managers, a business model for institutional investors that it has pioneered in Asia ex-Japan over the past two years.
But the firm has another side to its business, which also goes back to its roots as a technology consultant to investors in the United States: providing back- and middle-office processing for private banks.
Alfred West, CEO, says the firm is interested in bringing this aspect of its business to Asia, and will use 2006 to study the market in detail and come up with implementation strategies.
West emphasizes this isn't the firm's top priority. "The best way to grow your business is by taking care of your clients," he says, explaining that most resources will go to servicing existing clients on SEI's multi-manager platform.
But the firm will also study first Japan and then other developed markets for its processing platform for banks and other managers of wealth from high-net worth individuals, foundations, endowments and smaller pools of pension assets. Part of this involves understanding potential client needs, and part of it is technical, to understand what kind of connectivity the SEI processing platform would require.
The firm already does this for HSBC's private banking business, West notes. Clients in the US include Wells Fargo Bank and JPMorgan Chase. "We lift out the back office for private banks," he says. "We have to make the case that banks can grow their business better by using us. Yes they can also save money but that's not the driver. The biggest issue is for banks that haven't embraced outsourcing, and some are dead against it. But private banking isn't a core business for a lot of these big banks. It's a major part of HSBC's business, but it has never driven that bank. We can spend more money on the platform than the bank could afford to do by itself. We can deliver better quality because of straight-through processing. And we tie into the banks' systems, like front-office CRM."
West says this service doesn't compete head-on with custodian banks; SEI isn't a bank. But it does assume some custodial functions, and it relies on Brown Brothers Harriman for sub-custody relationships.
In the US, where SEI competes primarily with Sungard, it also provides this service for financial advisors and is piloting a project for hedge funds. SEI has no plans to introduce these services overseas, as the markets aren't sufficiently developed. It will begin processing for private banks in Europe next year even as it sniffs out opportunities in Asia and Japan.