Digital Transformation Reshaping Wholesale Investment Banking Models

By 4 Apr, 2016November 11th, 2019Press Releases

Cognito Europe

  • A digitally-driven industrial revolution is changing the investment banking landscape, rebalancing value creation across the mediums of manufacturing and distribution
  • Using an outsourced supply chain, banks will incorporate best-of-breed providers into the manufacturing element of product and service development
  • Data will deliver the full potential of digital investment banking through effective piloting that will allow banks to calibrate their product and service offerings to buyside requirements via connectivity and intelligence

LONDON – 04 April 2016 – A new report from GreySpark Partners, a leading global capital markets consulting firm, explores the digital transformation that the wholesale investment banking business model is facing, and which resembles a real industrial revolution for the sector. The report “Digital Transformation of Investment Banking” examines the influence of regulations, buyside institutions, the competitive landscape and technology innovation in driving this revolution, which ultimately will cause banks to become more reliable manufacturers of financial products and services, adopting leaner and more efficient business models.

The research details how banks will acquire the best practices of the automotive or aircraft manufacturing industries, which are two examples of industries that are similarly affected by regulation, direct government intervention via legislation, consistently evolving patterns of stock and services demand and a critical requirement to pool resources in order to innovate. GreySpark predicts that, as a result of a similar set of forces affecting their business models, banks will reinvent their operating models on three pillars:

    • A fully-automated manufacturing plant for the creation, assembly and packaging of financial products and services;
    • A multi-channel distribution franchise that provides a consistent user experience for all interactions between a bank and its clients;
    • Data managed as an asset across the entire supply chain.

The adoption of this new operating model has significant implications. For example, banks’ supply and value chains will invariably extend beyond the enterprise and incorporate suppliers, partners, market infrastructure and shared utilities. The number of joint ventures and strategic alliances between complementary institutions will multiply as banks focus on their core expertise, client franchises and geographies. And, as value creation will be effectively distributed across functions, the manner in which it is accounted for will also change so that it can be better determined where key decisions are made and how individual contributions are rewarded.

Frederic Ponzo, GreySpark managing partner and lead author of the report, said: “The ability of an institution to digitalise their operational workflow and to provide ease of transactions is a key factor in determining the winners and losers in the emerging digital investment banking space. Workflow integration must take place across asset classes and across the trade lifecycle. Banks must develop a multi-channel distribution franchise that provides a consistent user experience for all interactions between the bank and its clients, offering seamless integration with clients’ workflows to break the paradigm of clients adapting to a banks processes.”

Saoirse Kennedy, GreySpark senior consultant and report co-author, added: “In banks today, data exists as a series of inputs and outputs in systems defined by business processes that feed workflows, specifications and systems. The next generation of investment banks – digital investment banks – will see data as the foundation on which systems interact. Investment banking must move beyond basic recording and processing of data to allow for real value added that provides customers with more sophisticated services.”

For further information on GreySpark’s research, please e-mail: press@greyspark.com

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