Digital Transformation of Investment Banking

The Capital Markets’ Industrial Revolution

GreySpark Partners presents a report, Digital Transformation of Investment Banking, exploring the emerging industrial revolution of wholesale banking operations’ business models. It explores the influence of regulations, buyside institutions, the competitive landscape and technology innovation in driving this revolution, which will see investment banks transform into lean, efficient and reliable manufacturers and service providers.

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The report details how investment banks will adopt the best practices of manufacturing industries, learning from motor and aircraft manufacturers – two industries that also experience a heavy regulatory burden, regular government interference, ever evolving demand patterns, regular bouts of over-capacity and a critical requirement to pool resources in order to innovate. 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 the 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:

  • Investment 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.
  • As value creation will be effectively distributed across functions, the manner in which it is accounted for will also change – determining where key decisions are made and how individual contributions are rewarded.

Digital Transformation of Investment Banking – Table of Contents

  • 1. Introduction
    • 1.1. What is Digital Investment Banking?
    • 1.2. The Drivers of Digital Investment Banking
  • 2. Driver I: Regulations
    • 2.1. Transparency
    • 2.2. Counterparty Risk
    • 2.3. Market Risk
    • 2.4. Charges, Fees, Quality of Service
  • 3. Driver II: Client Demand
    • 3.1. Inversion of the Asymmetric Relationship Between the Buyside and the Sellside
    • 3.2. Increasingly Sophisticated Buyside Capabilities
    • 3.3. Componetisation of Products and Services
  • 4. Driver III: Competition
    • 4.1. Regionalisation and Specialisation
    • 4.2. Differentiation via Workflow Integration
    • 4.3. Focus on Service Offerings
  • 5. Driver IV: Innovation
    • 5.1. Innovation Led by the Consumer Sector
    • 5.2. Buy/invest Not Build
    • 5.3. Syndicated Effort
  • 6. Digital Investment Banking
    • 6.1. Manufacturing
    • 6.2. Distribution
    • 6.3. Data as an Asset