The one area where digitalisation within the corporate and investment banking industry has been taking place for the longest is within the realm of e-commerce. The ascent of e-commerce business model design thinking can be traced back to the early single-dealer platforms of the 1990s, the v1.0 specifications of the FIX protocol and the first multi-dealer platforms.
The past 10 years have seen an acceleration in both investment and innovation, moving ever more flow from voice to electronic. Distribution platforms became the sum of all the avenues by which clients interact with a bank, its products and its services. By transitioning from merely ‘electronic’ to ‘digital,’ the customer-facing franchise of a CIB focuses on customer experience, eliminating, or at least hiding, the internal complexity of the bank, and aiming to become an intrinsic part of their day-to-day activities.
In 2019, a CIB Digital Offering is underpinned by three fundamental concepts:
- Omni Channels Channel Distribution combined with Holistic Functional & Product Coverage – Capital markets distribution channels utilised by banks include voice, messaging, single-dealer platforms and portals, multi-dealer platforms and APIs such as FIX. Additionally, the channel coverage can differ by product and functional capabilities during the pre- / at- / post-trade lifecycle. This multiplicity of entry points must be maintained to allow clients to use the ones that fit best with their needs and preferences. At the same time, any client should be able to access the full range of services (front-to-back), as well as all the asset classes relevant to them, from these very same channels.
- Continuous Client Experience – Banks can no longer dictate how their clients should transact and interact with them; the consumer technology sector has forever changed our expectations. From the ubiquity of mobile devices, to the ability to continue watching a movie on your television from where you left it during your evening commute, to the artificial intelligence that saves time and laborious tasks. A CIB’s Digital Distribution Platform must offer a consistent user experience, allowing users to transition seamlessly from one device to another, from one place to another, and must be able to do so at any time, thus confirming the aphorism that simplicity is the ultimate form of sophistication.
- Integration with Client Workflows – Rather counter-intuitively, the best way for a sellside provider to differentiate itself is to disappear. What this means is for the bank to become so well integrated into its client’s workflows first, and actual systems second, that it becomes part of the hidden fabric that allows its clients to perform their jobs. When a bank reaches such a level of embedment with its users and customers, the symbiosis can only but endure and reinforce itself with time.
Digital Distribution in a Post ‘Electronification’ World
The rise of e-trading promised banks that they could trade everything with everyone, everywhere. This lasted for a little while.
However, as the financial crisis now recedes in our rear-view mirrors and re-regulation is finally running its course, the investment banking sector is left more fragmented, and CIBs have had to choose what their core products, geographies and franchises are. This makes Digital Distribution more important, and not less, as the tool to achieve more depth with chosen customers, while retaining the optionality to expand into new areas without onerous delays or substantial capital expenditure.
In the next article, we will be looking into a new and rapidly appreciating asset class: data
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