With the recent appointment of Luxembourg branch manager Riccardo Lamanna to an executive role at State Street Bank International, the Boston-based financial services firm now is refining its European operations from Luxembourg.
This next phase in European development, anchored in Luxembourg’s advanced financial ecosystem, aims to align regional operations with corporate objectives, enhance product offerings, and streamline efficiencies.
The appointment of Lamanna (photo) is part of a broader alignment of SSBI’s regional operations with corporate strategies. Under Andreas Przewloka, CEO of SSBI, and Chris Rowland, head of custody, cash, and depositary bank services, Lamanna will oversee product governance and development across SSBI’s continental European operations, excluding the UK and Ireland. Denis Dollaku has also been appointed as head of business for SSBI, focusing on business development.
“The appointment reflects a need for consistency in managing and developing our products across regions,” Lamanna explained. “Our goal is to align regional and country-specific responsibilities with our corporate strategy, enhancing our ability to deliver value to our clients.”
Luxembourg as cornerstone
Luxembourg remains a cornerstone of State Street’s operations, providing a hub for innovation and client engagement. With its advanced investment services ecosystem, Luxembourg offers insights into sector trends and technological advancements. Lamanna emphasised the country’s importance due to the significant assets under custody and administration, which are critical to State Street’s revenue streams.
“Luxembourg has been at the forefront of product development for decades.”
Riccardo Lamanna, State Street Bank International
“Luxembourg has been at the forefront of product development for decades,” Lamanna said. “It’s a place where new products emerge, driven by our relationships with major clients and our commitment to innovation.”
“Luxembourg is the largest location within State Street Bank International in terms of assets under custody, administration, and transfer agency, as well as revenue. This proximity allows us to receive valuable input from them and promotes the development of new products and services that can be integrated into our global offerings.”
Technological evolution and client-centric solutions
Asked about the widespread use of Excel spreadsheets in Luxembourg’s fund industry, Lamanna made clear he prefers to speak about “macros”, which he defines as “functionalities based on Microsoft Excel or Access”. Underlining the evolution of State Street’s service offerings, he said the firm has invested heavily in automation and bespoke solutions to meet client needs.
“While some services or functions might still be done using so-called ‘macros’, most are integrated add-ons to our core services. We’ve worked hard to automate as much as possible, and this has been successful. Some of these complex services are unique to us and highly valued by our clients.”
Alpha platform
State Street’s commitment to technological advancement is exemplified by its Alpha platform, which aims to compete with similar services such as Blackrock’s Aladdin and Bloomberg. Acquired in 2018 with Charles River Development, Alpha integrates front-to-back services, focusing on data consistency and client-centric solutions.
Embracing Alpha has allowed the company to enhance its range of services within the investment management value chain. Previously, State Street focused on core and middle-office functions, but with Alpha, it entered the front-office space, addressing client demands for a more comprehensive suite of offerings.
“The Alpha platform shifts our focus from application-specific services to data services,” Lamanna explained. “The Alpha platform places data at the core of our services, allowing us and our clients to add, consume, and enrich data consistently within an open and interoperable platform.”
Digital ‘not a primary driver’ of consolidation
The financial services sector is undergoing significant consolidation, driven by the need for efficiency and scale in a highly competitive environment. Lamanna acknowledged that digitalisation plays a crucial role in this process, but it’s not the sole driver.
“I don’t think that digitalisation is the primary driver for consolidation. Digitalisation helps improve efficiency and margins, especially in an environment where many services are becoming commoditized. However, it requires significant investment, which not all firms can afford. Giants like State Street and others can invest heavily, but smaller firms may struggle to keep up.”
“From State Street’s perspective, we have always pursued growth through both organic and inorganic means. We continually evaluate potential acquisitions, geographical expansions, and ways to fill product gaps or increase volumes.”
Future of depositary banking
Depositary banking remains a fundamental part of State Street’s service offering, especially in Europe, where regulatory requirements and market practices vary significantly. Lamanna’s role includes ensuring that State Street’s depositary services are consistent and aligned across different jurisdictions. For State Street Bank International, depositary banking is a significant business in terms of assets under custody.
“We consider the depositary bank a fundamental part of our service offering,” Lamanna said. “It’s not just a legal requirement but also a significant service for our clients. In some countries, the revenue from depositary banking surpasses that from other services.”
“We have always pursued growth through both organic and inorganic means. We continually evaluate potential acquisitions, geographical expansions, and ways to fill product gaps or increase volumes.”
State Street is a top player in this business in most EU countries, except for France. “We’ve noticed that depositary banking has not been treated holistically as a product; it has traditionally been managed on a country-by-country basis due to differing regulatory oversight,” he said. “The depositary bank is not yet a passportable product across the EU, and even if it becomes one, it will likely be to a minimal extent.”
State Street itself does take a holistic approach to depositary banking, said Lamanna. “We are examining the variations in our services and progressively aligning our practices across different markets to ensure consistency and compliance with European regulations.”