GreySpark: Digitalization Transforms Wholesale Investment Banking Models

GreySpark: Digitalization Transforms Wholesale Investment Banking Models
04.04.2016 09:30 am

GreySpark: Digitalization Transforms Wholesale Investment Banking Models

Wholesale Banking , Infrastructure

A new report from GreySpark Partners 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:

1.     A fully-automated manufacturing plant for the creation, assembly and packaging of financial products and services;

2.     A multi-channel distribution franchise that provides a consistent user experience for all interactions between a bank and its clients;

3.     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.”

Related News

ChartIQ Updates Desktop Integration Platform

ChartIQ, a financial technology company that delivers software to help the finance world work smarter, today introduced Finsemble 4.0, the latest release of the company’s... Read more »

AcadiaSoft and Clarus Team on Initial Margin Analytics Service

AcadiaSoft Inc., the leading industry provider of risk and collateral management services for the non-cleared derivatives community, today announced it will launch a joint... Read more »

Penta Offers Founder Package For Easy Company Creation

German business banking platform Penta has opened a one-stop shop for entrepreneurs to get their business propositions off the ground, co-operating with legal network... Read more »

Tencent and DST Global Pump $115 Million into Qonto

French neobank Qonto has raised $115 million in Series C funding from Tencent and DST Global to double down on existing markets, develop new features to tailor its products to... Read more »

Wethaq Launches First Sukuk on its Market Infrastructure Using SWIFT gpi Link

Wethaq announced that it has issued the first pilot Sukuk on its securities market infrastructure for the Islamic capital markets under the supervision of the Dubai Financial... Read more »

Capitolis Raises $40 Million

Capitolis, a 'next generation' provider of capital markets technology founded by Gil Mandelzis, ex-Traiana, and Icap, Tom Glocer, ex-CEO of Thomson Reuters, and Igor... Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel