Embeddedness in custodial banking

This paper contributes to financial geography by discussing globalisation and local embeddedness in the Australian custodial banking industry. Qualitiative interviews with custodial bankers revealed that the combination of cost pressures, electronic information processing systems, and electronic networking made local (intraurban) embeddedness in the Sydney financial district unimportant. Although it is essential for master custodians to understand domestic securities markets characteristics, the commoditised nature of subcustody makes it cost effective to outsource these functions to external supplier banks through strategic alliances that illustrate flexible corporate integration. These interbank production networks and information flows occur electronically and are co‐ordinated at the global rather than local (intraurban) scale. Furthermore, these formal networks are not underpinned by embedded social relationships and informal information exchanges. Master custodians are embedded at the national scale to understand local accounting and securities regimes and provide client service, which is important given the electronic basis of custody.