What is custodian banking?

In the securities business, large institutional investors do not actually take possession of the securities they buy. They use third-parties called "Custodians".

These custodians undertake to electronically or physically store securities for their clients and keep accurate records of the securities held for clients. This is now available to smaller individual clients too, and such institutions are sometimes called repositories.

It works very much similar to how a warehousekeeper stores goods for clients in their warehouse.

This custodial business is called custodial banking.