Innovative development for India’s Investment Banking

by Pooja Late so cut

Investment banks if they are to compete in tomorrow’s capital market industry need to transform themselves. Therefore, in this article, we will look at some pillars that are fundamental in the transformation of investment banks. The pillars in our view include distribution, vision, client centricity, financial and risk control, organizational vitality and IT and operational excellence and IT. These are very critical in building a more comprehensive strategy for transformation of the business model.

Vision. Banks should identify the key part of the capital markets revenue ecosystem, which they wish to get involved too. They must connect the resources and the sources of competitive advantage at their disposal, then able to look out for the most operative mechanism in order to maximize revenues.

Distribution. The bank must be able to explore changing prices for capital light agency services over a balance sheet intensive principal based services. One thing that will help in invigorating and improve customer’s experience is digital functionality. Primary markets that largely on human talent such low capital intensive, high margin are less threat when compared to capital intensified trading. The distribution through electronic medium has to be combined with homogeneous connectivity. A shift in the execution of trading will have an impact on the revenue model dynamics. Commitment to a few key asset classes and to building electronic scale through powerful internalization engines will be critical, as will big data drove customer analytics in those areas. Broker, clearing, and exchanges costs will need to be tightly controlled in order for an electronic market-making business to succeed.

Client Centricity. The understanding share of wallet, client profitability and segmentation of investment banking will help most firms in understanding the balance of trades between banks and its customers. Banks in this way have to move into the provision of services rather than supplying products. Through assisting their clients, they can succeed in generating more revenues. Focusing on conducting share of wallet analyses and serving the client tail best, will ensure that they are being adequately rewarded for the resources and services they provide. To reduce costs, banks have begun simplifying their client onboarding processes.

IT and Operational Excellence: Many banks have complex and highly personalized platforms, which have evolved in meeting the changing demands of business requirements. The establishment of a technology architecture and target process, with a stronger governance process, to ensure these new customization and development are in line with various architectural standards. This can help in the reduction of complexity and a longer cost of ownership. The partnerships with financial technology firms can provide significant efficiencies, but this is dependent on the various infrastructure companies.

Author’s Bio

Tracy Moses in this post enlightens his ardent readers how investment banking needs to transform themselves. He also looked at some pillars to help in this transformation process