Investment banking is a division within the bank, which focuses on capital creation for other organisations. Holding the responsibility to underwrite new debt and equity securities, facilitating mergers and acquisitions, and also brokering trades for companies or private sectors. Investment banking also offers guidance to issuers regarding placement of stocks.
The common services and approach adopted by investment banking in the past, might not be amongst its best features today. Now is the time of not only adapting to change but creating the change. Business, as usual, might not be enough, hence with time, one can see the shift in the approach of investment banking. To create new capabilities, the banking sector is looking outside the box, it is looking at ways the ecosystem can be enhanced, so they are considering expansion in digital technologies, which can, in turn, open avenues and create utilities.
According to data collected through various research, to keep up with the evolution of financial services landscape, to be successful, banks will be forced to change the way they perceive themselves and their clients and will need to evolve their approach with the fundamental realisation to Simplify, Digitise and Innovate themselves.
Simplify so that cost can be managed and clients have a hassle free interface, basically offering convenience.
Digitise, well that is the need of the hour. For smoother internal and external customer interaction and retention.
And lastly Innovate, any system that has stood the test of time over years has done that only for its ability to adapt, however, if an industry is capable of bringing about the change, it can guarantee success and immortality. With the options that are present today, excessive availability to data, advanced research function, distributed ledger technology, with the accelerated speed at which the world is changing, investment banking needs to ground its existence by coming around it with flexibility and gumption.
There are many disruptors in this path and banks will have to tailor and channel pioneering products with innovative strategies to combat the same.
Some philosophies will need to be realigned…...
The way profitability was perceived might need to be relooked, as the financial landscape continues to grow, banks will have to shift focus from margin driven products and profitability to volumes driven profitability.
The traditional components of diversified portfolios will need structured products so that it can offer tailored coverage to otherwise tough to acquire asset classes and subclasses. For the modest level of investment banks, this territory of structured by-products will become essential.
A confluence of disruptors is Blockchain, which will force the financial services transaction to digitise and securely distribute.
One can see timely intervention from the use of independent pricing vendors by a financial institution, to control competition, and create a sense of transparency and calm in transactions.
Banks will need to play to win, by creating the talent which can adapt to the digital upspring in operations and other critical customer dependent and focused departments.
It’s time to realign strategies keeping up with the changing ecosystem with the approach towards utilities. It is predicted that the year 2017-2018 will be the year of transition for investment banks.