Winning a new servicing mandate is usually presented as a growth story: more assets, more clients, more revenue and perhaps greater geographic reach. But operationally, the mandate can arrive carrying something else: a collection of bank accounts, banking relationships, payment processes and reporting requirements that may remain with the servicer for years.
That matters because the economics of growth look very different when each new client structure adds another layer to the banking estate. For credit servicers and loan administration businesses, banking is not simply a corporate treasury function sitting quietly behind the organisation. It can be part of the infrastructure through which client cashflows are managed, payments are processed and servicing information is produced.
The commercial question is therefore not simply how many new mandates can we win? It is also how much operational complexity does each mandate introduce?
Jeremy Slade is Head of Digital Solutions, Private Markets. He has more than 25 years of experience in financial services and has built and led businesses and commercial teams across Europe, Asia, the Middle East and the US. Having worked extensively with private markets and institutional investors, Jeremy brings a global perspective on how technology, banking and financial infrastructure are evolving.
Consider what happens when a servicer wins a reasonably complex piece of business. There may be multiple legal entities, several bank accounts, different currencies, existing banking relationships that have to be retained, particular payment processes and different teams requiring access to information.
None of these requirements is especially unusual on its own. The difficulty comes from multiplication. Ten additional accounts do not sound dramatic, and neither does another banking relationship. But repeat that process across dozens of mandates and several jurisdictions and the banking environment starts developing independently of the organisation's intended operating model.
Mount Street illustrates the scale this can reach. The credit servicing and asset management business oversees approximately $162 billion of assets under administration for more than 150 clients. Within its servicing activities, it manages several thousand bank accounts across dozens of banking partners globally and processes approximately 35,000 payments each year.
At that point, bank administration is no longer a peripheral activity. It becomes an operating model question.
There is another reason the economics are easily underestimated. Opening or incorporating a new account may be an onboarding event, but managing it is not. Once the mandate is live, someone still has to access banking information, deal with payments, support reporting and operate the relevant processes throughout the life of the structure.
The initial revenue from a new mandate may therefore arrive immediately, while the associated banking administration becomes a long-term obligation. That creates a subtle risk for servicing businesses: revenue can scale faster than the processes underneath it.
At first, the consequence may simply be additional work. Teams spend longer navigating portals, moving information between systems or tracking down banking data. As volumes increase, however, those tasks become more difficult to absorb informally. More accounts mean more exceptions, more banking relationships mean more variations in process, and more jurisdictions mean more ways of doing essentially the same thing.
What was once administrative friction starts influencing operating capacity.
This suggests that servicing businesses should think about scale differently. Assets under administration and client numbers will always matter commercially, but operational leaders should also understand what happens to banking complexity as those numbers grow.
Useful questions include:
The objective is not necessarily to reduce the number of banks. In servicing businesses, that may not be realistic. Clients, transactions and existing structures can determine where accounts are held. The more useful question is whether each new relationship becomes another independent process.
This is where the Mount Street experience becomes interesting. Its objective was not simply to make treasury administration easier. The firm wanted banking infrastructure capable of supporting the way its servicing business was growing.
According to the client story, centralising banking connectivity and information through Cobase has helped Mount Street incorporate new accounts and banking relationships without each one adding the same degree of separate operational complexity.
That distinction matters. The value of standardisation in a servicing business is not that every underlying client structure becomes identical. They won't. It is that the operational organisation does not have to reinvent how it interacts with banking information every time another structure arrives.
That is a much bigger growth issue than saving a few minutes logging into a portal. A successful mandate should increase the business without requiring the operating model to become incrementally more complicated forever.
For servicing businesses managing large numbers of client accounts across multiple banks, the challenge is not simply seeing cash. It is creating a more consistent way to access banking information, initiate and track payments, apply approval workflows and maintain control across separate client structures.
Cobase provides a centralised banking layer that can support that operating model while allowing the underlying bank relationships to remain in place.