IT

Capital Markets

Investment banks are going through a new disruptive life cycle. Higher capital requirements, compliance costs, and market volatility is increasing pressure on margins and generating an incomparable level of uncertainty. As a result, every investment bank has begun to abandon unprofitable business lines to focus on core revenue generating capabilities.

 

Many players have been forced to become niche and deliver high-return tailored products and services to their clients. Others have opted for the flowing giant model to pursue high volumes. In both cases, keeping with the status quo is no longer an option.

A distribution strategy leveraging new channels has become a key success factor for both off-the-shelf products and tailor-made services. New channels are the only way to reduce the cost-to-serve. For tailor-made services, digital distribution enables the delivery of innovative services and customer experiences that create a distinctive positioning against competitors. “Anywhere-anytime” is the new motto.

Risk management is high on the agenda. An organisation must align business processes to match the evolving regulatory environment. New regulations are demanding that investment banks create new governance models and monitor procedures closely. The real challenge for investment banks is promoting a pervasive culture that enables a clear measurement of the “cost-of-risk”, based on an end-to-end view of processes and controls. Compliance is more than just a mandatory requirement. It is an opportunity to rethink an organisation’s operating framework and strategy.

Technology and big data enable risk management. Almost as a reverse engineering exercise, many banks are beginning to align business frameworks to the technology landscape by transforming front-middle-back office trading architectures from vertical-product driven silos, to cross-product systems. This enables faster product innovation and process industrialisation. In addition, investment banks need to exploit their data. This will assist with risk monitoring and creating effective pricing models.


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