TOP 10 CHALLENGES FOR INVESTMENT BANKS
One indication is the investment in fintech financing. Total investment in fintech startups from 2010 to 2015 is estimated at more than $47 billion.5 The impacts of these digital technologies are being felt across organizations— from sales channels and trading venues, to operational and compliance processes and enterprise functions. This year, beyond growing fintech investment and adoption, Accenture has observed how investment banks are increasingly looking beyond their institutions to accelerate the creation of new capabilities. The industry’s interest in utilities and ecosystems as important levers for change has been noted in the past, but there are signs that momentum is building:
- The journey to the cloud is accelerating J.P.Morgan CIO Dana Deasy committed to the public cloud, confirming the important role of cloud providers in enabling digital technologies and delivering on the strategic priorities of banks.
- Consortia are setting standards and open source to make collaborative-based technologies a reality R3CV, with over 50 members7 , and Hyperledger with 13 premier members, 77 general members and 4 associate members at the end of November8, illustrate the role that the industry can play in making blockchain a reality.
- The push to digital platforms continues Bank of America Merrill Lynch launched Instinct® Loans, a new electronic platform for the secondary trading of syndicated corporate loans.9 Against this backdrop, Accenture’s research led to three key themes for this year’s Top 10 Challenges.
Investment banks have been on this journey for some time, but simplification remains a high priority. It is the key to improving growth opportunities, serving clients better, reducing the burden of legacy technology (including investment drain and barriers to new technology adoption), creating shared-service efficiency via common processes, and reducing errors and reconciliation from duplicative effort. This year, there are four identified challenges related to simplification:
- CHALLENGE 1: Pruning for Growth and Distinctiveness
- CHALLENGE 2: Getting Fit: Aggressive Cost Reduction
- CHALLENGE 3: Turning Automation into Intelligence
- CHALLENGE 4: Pressing the Reset Button on Location Strategy
Investment banking has always been a very innovative industry. The creation of new financial instruments, the adoption of electronic trading venues and the use of analytics platforms are just a few examples. In the immediate aftermath of the 2008 financial crisis, innovation suffered as banks reacted to immediate cost and compliance pressures. Although these pressures have not abated, investment banks have adapted to a new reality. Many recognize the important role that innovation can play in managing these challenges and driving growth. This year, there are three identified challenges related to innovation:
- CHALLENGE 8: Getting Innovation Right
- CHALLENGE 9: Rethinking the Research Function
- CHALLENGE 10: Using Distributed Ledgers: Blockchain Moves to Early Adoption
Building on the foundation of the past two years, many investment banks are increasing their investment, participation and collaboration in digital technologies, and looking for new ways to engage third parties. This year, there are three identified challenges related to digitization:
- CHALLENGE 5: Getting It Right with Digital Talent
- CHALLENGE 6: Liquid Standards: Improving the Client Experience
- CHALLENGE 7: Accelerating the Journey to Cloud