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Digital Technology:
Creating a new client
experience
Top Ten Challenges for
Investment Banks 2015
08
DigitalTechnology:
Creatinganewclient
experience
08
Digital Technology:
Creating a new client experience
Client adoption of digital technology is causing a shift in
the investment banking world. Unlike previous technological
evolutions the digital revolution is client-driven (see Fig. 1),
and investment banks’ interaction with their clients is
beginning to change in both complexion and complexity.
Other industries have seen the impact of
such a shift and, while investment banks
have long been technology innovators,
seldom have we seen such disruptive forces
coming from “outside the four walls”.
Historically, technology has been used to
create new trading platforms, develop new
financial products and streamline processes
for cost savings. Evolving digital
technologies challenge the traditional
investment bank value chain, allowing for
new entrants and for new interaction
models that can be both innovative as well
as disruptive. The other characteristics that
make this “S-curve” different is that it
comes at a time when it is cheaper and
easier than ever for smaller, innovative
start-up firms to create new technologies
(the Amazon “cloud phenomenon”) and at a
time when the available discretionary spend
in investment banks is under siege.
Investment challenges notwithstanding,
the industry is clearly facing the prospect
of clients who are more socially media
aware and more demanding of how they
interact and consume products and
services and how they view their
relationships and interactions with
investment banks.
Increased client touch and intuitive,
interactive digital applications will allow
enriched consumer engagement and
understanding. And, as with other
industries, the move towards a more
client-centric and interactive approach will
ultimately trigger a behavioural change
between the investment bank and its
clients. While many early examples have
been taken in the retail wealth
management industry, institutional
investors are becoming increasingly savvy
and demanding of similar services and
2
capabilities. Most investment banks have
already made significant investments in
client portals and customer reporting using
digital channels and capabilities. Analytics
for risk has also been a key focus area in
this domain. These are important areas of
focus and yet they represent only the early
days of this innovation curve.
Push and pull factors driving digital
The regulatory burden for investment banks
remains one of their biggest challenges,
demanding further simplification and
transparency – a challenge given legacy
environments. Digital technologies using
smart data management solutions help to
satisfy regulatory requirements and are
also changing the client experience in the
process. For example, the implementation
of Swap Execution Facilities has allowed
greater regulatory oversight whilst
improving efficiency, clearing costs and
speed of pricing for users.
Furthermore, as margin pressure continues
to weigh heavily and scope for traditional
cost savings becomes exhausted, digital
technologies provide new opportunities for
client value creation in terms of
understanding client needs, enabling
smarter cross and upselling and the
formation of new products.
So from push factors to pull factors, cost
benefits, protection from disruptors,
renewed and novel revenue growth
prospects and the opportunity for greater
client engagement, the necessity for
investment banks to get behind digital is
present and increasing.
3
Most investment banks have already made significant
investments in client portals and customer reporting using
digital channels and capabilities. Analytics for risk has also
been a key focus area in this domain. These are important
areas of focus and yet they represent only the early days of
this innovation curve.
Figure 1: The customer-led digital revolution in Capital Markets
Source: Accenture Research
FIX
Standard
Early 1990’s Late 1990’s – Early 2000’s Mid – Late 2000’s Early 2010’s
Electronic
Equity
Trading
Instant
Bloomberg
(B)
ETF’s
E*Trade Online
Account
Access
Portals
liquidnet
Electronic Connectivity Internet Electronic Communication “Digital Revolution”
Capital Markets Industry-Led Innovations
Prior
Technological
Revolutions
Digital
Revolution
Customer-Led
Swinging the balance back in
clients’ favour
Digital is helping swing the balance back
into the clients’ favour, with their
interests expanding beyond execution
and Straight-Through Processing (STP)
services to pre- and post-trade analytics,
allowing investment banks the
opportunity to finally realise Trade
Lifecycle Optimization strategies and
their inherent value.
As many digital technologies are
intrinsically customer-focused, giving
customers the ability to see personalised
and tailored information, through the
medium of their choosing, when and
where they want it, the restoration of
this balance will once again put investors
in the driving seat. Early adopters in the
investment banking community will also
benefit from their ability to differentiate
their service models from their peers.
Demand for a dedicated digital
approach
For banks, this implies a requirement to
create and to commit to a client-focused
digital strategy. First and foremost is the
need to recognise the fundamental
4
80%
believe digital to be a growth initiative with client
emphasis, half anticipated further digital change in
the coming year. and 30% already see digital
facilitating a complete business.
i Statistics relate to respondents in a recent Accenture
survey of digital trends in investment banking
Figure 2: Digital Trends in investment banking
impact digital will have on the business
model, client expectations, operating
model choices and market positioning.
While it is also true that banks will need
to take supporting steps such as
appointing a dedicated digital lead, or
Chief Digital Officer (CDO), assign a
budget for digital change and
innovation, etc., these preliminary
decisions will be important if banks
are to achieve the full benefits of their
investments. We also believe that
investment banks need to rethink the
way their engage with the fintech
have a digital strategy
expect more digital
change in the next year
70% 30%
see cost reduction
opportunity and
see complete business
transformation
see a risk reduction and control
opportunity
But – not fully defined and no
clear market leader
80%
40%
50%
Client
Tools Portals
User
Experience
80%
see this as agrowth
initiative and focus
on the client
Source: Survey of Digital Trends in Investment Banking, Accenture Research
i
5
We are also seeing the rise of the next
class of industry utilities leveraging these
digital technologies, and the advent of new
standards that hold great promise as well
as demands for investment banks.
eco-system. Whether this be through
launching their own fintech investment
funds, engaging with incubators or other
forms of collaboration, the very nature of
this environment demands something
more “external”.
Based on recent Accenture insight from
selected investment bank clients, 80%
believe digital to be a growth initiative
with client emphasis, half anticipated
further digital change in the coming year
and 30% already see digital facilitating a
complete business transformation even
though they have not fully been able to
identify the full impact of this technology
(see Fig. 2). Looking to other industries,
we believe that the investment bank of
the future will need to have gone
through such a complete transformation
to survive.
Siloed platforms and asset classes are
giving way to integrated and interactive
portals, allowing for adoption and
innovation of new technologies. For
example, Saxo Bank’s TradingFloor.com
has introduced a socially collaborative
aspect to trading which enables users to
follow, rate, and even mirror positions of
their favoured traders.
Technology continues to deconstruct the
walls that once surrounded capital
markets and former powerhouses’
dominant access to information, price,
and liquidity. New entrants enabled by
innovative digital technologies will come
from all sides; small fintech start-ups and
non-traditional providers (Google, for
example) will compete with either a head
start or a clean slate in the digital space.
The number, type, and sophistication of
buy-side participants will also increase,
as will the scope of instruments at their
disposal. Whilst not necessarily a direct
opportunity to take market share, the
complex nature of the investment
banking client relationship makes digital
an enabler for greater client “stickiness”.
Price availability, research, multi-asset
and multi-functionality will remain key,
but increasing collaboration, providing
access to liquidity, enhancing products
and enriching the client experience, will
be the differentiator.
We are also seeing the rise of the next
class of industry utilities leveraging these
digital technologies, and the advent of
new standards that hold great
promise as well as demands for
investment banks. Again, the concept
of understanding the eco-system is
critical to ensure that even the most
innovative banks do not become
islands of automation that cannot
achieve industry-wide connectedness.
The ethos of digital goes beyond the
technology behind it; it is a collective
mind-set blurring traditional lines,
generating more-for-less, and yielding
customer-focused approaches backed
by fundamentally re-defined
investment propositions and solutions.
Our assessment of the promise and
the threat of these innovations
provides the strongest indication that
banks need to carefully examine their
business models, client interactions,
and how they play in this evolving
ecosystem.
About Accenture
Accenture is a global management
consulting, technology services and
outsourcing company, with more
than 305,000 people serving clients in
more than 120 countries. Combining
unparalleled experience, comprehensive
capabilities across all industries and
business functions, and extensive
research on the world’s most successful
companies, Accenture collaborates
with clients to help them become
high-performance businesses and
governments. The company generated
net revenues of US$30.0 billion for the
fiscal year ended Aug. 31, 2014. Its home
page is www.accenture.com.
Accenture Experts
To discuss any of the ideas presented
in this paper please contact:
Sigrid Seibold
Managing Director
Capital Markets, New York
sigrid.seibold@accenture.com
+1 917 453 9981
Ciara O’Leary
Capital Markets, London
ciara.d.oleary@accenture.com
+44 20 335 2752
Disclaimer
This report has been prepared by and is distributed by Accenture. This document is for
information purposes. No part of this document may be reproduced in any manner
without the written permission of Accenture. While we take precautions to ensure
that the source and the information we base our judgments on is reliable, we do not
represent that this information is accurate or complete and it should not be relied upon
as such. It is provided with the understanding that Accenture is not acting in a fiduciary
capacity. Opinions expressed herein are subject to change without notice.
Copyright © 2014 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.

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Top Ten Challenges for Investment Banks 2015: Revolution: Challenge 8

  • 1. Digital Technology: Creating a new client experience Top Ten Challenges for Investment Banks 2015 08 DigitalTechnology: Creatinganewclient experience
  • 2. 08 Digital Technology: Creating a new client experience Client adoption of digital technology is causing a shift in the investment banking world. Unlike previous technological evolutions the digital revolution is client-driven (see Fig. 1), and investment banks’ interaction with their clients is beginning to change in both complexion and complexity. Other industries have seen the impact of such a shift and, while investment banks have long been technology innovators, seldom have we seen such disruptive forces coming from “outside the four walls”. Historically, technology has been used to create new trading platforms, develop new financial products and streamline processes for cost savings. Evolving digital technologies challenge the traditional investment bank value chain, allowing for new entrants and for new interaction models that can be both innovative as well as disruptive. The other characteristics that make this “S-curve” different is that it comes at a time when it is cheaper and easier than ever for smaller, innovative start-up firms to create new technologies (the Amazon “cloud phenomenon”) and at a time when the available discretionary spend in investment banks is under siege. Investment challenges notwithstanding, the industry is clearly facing the prospect of clients who are more socially media aware and more demanding of how they interact and consume products and services and how they view their relationships and interactions with investment banks. Increased client touch and intuitive, interactive digital applications will allow enriched consumer engagement and understanding. And, as with other industries, the move towards a more client-centric and interactive approach will ultimately trigger a behavioural change between the investment bank and its clients. While many early examples have been taken in the retail wealth management industry, institutional investors are becoming increasingly savvy and demanding of similar services and 2
  • 3. capabilities. Most investment banks have already made significant investments in client portals and customer reporting using digital channels and capabilities. Analytics for risk has also been a key focus area in this domain. These are important areas of focus and yet they represent only the early days of this innovation curve. Push and pull factors driving digital The regulatory burden for investment banks remains one of their biggest challenges, demanding further simplification and transparency – a challenge given legacy environments. Digital technologies using smart data management solutions help to satisfy regulatory requirements and are also changing the client experience in the process. For example, the implementation of Swap Execution Facilities has allowed greater regulatory oversight whilst improving efficiency, clearing costs and speed of pricing for users. Furthermore, as margin pressure continues to weigh heavily and scope for traditional cost savings becomes exhausted, digital technologies provide new opportunities for client value creation in terms of understanding client needs, enabling smarter cross and upselling and the formation of new products. So from push factors to pull factors, cost benefits, protection from disruptors, renewed and novel revenue growth prospects and the opportunity for greater client engagement, the necessity for investment banks to get behind digital is present and increasing. 3 Most investment banks have already made significant investments in client portals and customer reporting using digital channels and capabilities. Analytics for risk has also been a key focus area in this domain. These are important areas of focus and yet they represent only the early days of this innovation curve. Figure 1: The customer-led digital revolution in Capital Markets Source: Accenture Research FIX Standard Early 1990’s Late 1990’s – Early 2000’s Mid – Late 2000’s Early 2010’s Electronic Equity Trading Instant Bloomberg (B) ETF’s E*Trade Online Account Access Portals liquidnet Electronic Connectivity Internet Electronic Communication “Digital Revolution” Capital Markets Industry-Led Innovations Prior Technological Revolutions Digital Revolution Customer-Led
  • 4. Swinging the balance back in clients’ favour Digital is helping swing the balance back into the clients’ favour, with their interests expanding beyond execution and Straight-Through Processing (STP) services to pre- and post-trade analytics, allowing investment banks the opportunity to finally realise Trade Lifecycle Optimization strategies and their inherent value. As many digital technologies are intrinsically customer-focused, giving customers the ability to see personalised and tailored information, through the medium of their choosing, when and where they want it, the restoration of this balance will once again put investors in the driving seat. Early adopters in the investment banking community will also benefit from their ability to differentiate their service models from their peers. Demand for a dedicated digital approach For banks, this implies a requirement to create and to commit to a client-focused digital strategy. First and foremost is the need to recognise the fundamental 4 80% believe digital to be a growth initiative with client emphasis, half anticipated further digital change in the coming year. and 30% already see digital facilitating a complete business. i Statistics relate to respondents in a recent Accenture survey of digital trends in investment banking Figure 2: Digital Trends in investment banking impact digital will have on the business model, client expectations, operating model choices and market positioning. While it is also true that banks will need to take supporting steps such as appointing a dedicated digital lead, or Chief Digital Officer (CDO), assign a budget for digital change and innovation, etc., these preliminary decisions will be important if banks are to achieve the full benefits of their investments. We also believe that investment banks need to rethink the way their engage with the fintech have a digital strategy expect more digital change in the next year 70% 30% see cost reduction opportunity and see complete business transformation see a risk reduction and control opportunity But – not fully defined and no clear market leader 80% 40% 50% Client Tools Portals User Experience 80% see this as agrowth initiative and focus on the client Source: Survey of Digital Trends in Investment Banking, Accenture Research i
  • 5. 5 We are also seeing the rise of the next class of industry utilities leveraging these digital technologies, and the advent of new standards that hold great promise as well as demands for investment banks. eco-system. Whether this be through launching their own fintech investment funds, engaging with incubators or other forms of collaboration, the very nature of this environment demands something more “external”. Based on recent Accenture insight from selected investment bank clients, 80% believe digital to be a growth initiative with client emphasis, half anticipated further digital change in the coming year and 30% already see digital facilitating a complete business transformation even though they have not fully been able to identify the full impact of this technology (see Fig. 2). Looking to other industries, we believe that the investment bank of the future will need to have gone through such a complete transformation to survive. Siloed platforms and asset classes are giving way to integrated and interactive portals, allowing for adoption and innovation of new technologies. For example, Saxo Bank’s TradingFloor.com has introduced a socially collaborative aspect to trading which enables users to follow, rate, and even mirror positions of their favoured traders. Technology continues to deconstruct the walls that once surrounded capital markets and former powerhouses’ dominant access to information, price, and liquidity. New entrants enabled by innovative digital technologies will come from all sides; small fintech start-ups and non-traditional providers (Google, for example) will compete with either a head start or a clean slate in the digital space. The number, type, and sophistication of buy-side participants will also increase, as will the scope of instruments at their disposal. Whilst not necessarily a direct opportunity to take market share, the complex nature of the investment banking client relationship makes digital an enabler for greater client “stickiness”. Price availability, research, multi-asset and multi-functionality will remain key, but increasing collaboration, providing access to liquidity, enhancing products and enriching the client experience, will be the differentiator. We are also seeing the rise of the next class of industry utilities leveraging these digital technologies, and the advent of new standards that hold great promise as well as demands for investment banks. Again, the concept of understanding the eco-system is critical to ensure that even the most innovative banks do not become islands of automation that cannot achieve industry-wide connectedness. The ethos of digital goes beyond the technology behind it; it is a collective mind-set blurring traditional lines, generating more-for-less, and yielding customer-focused approaches backed by fundamentally re-defined investment propositions and solutions. Our assessment of the promise and the threat of these innovations provides the strongest indication that banks need to carefully examine their business models, client interactions, and how they play in this evolving ecosystem.
  • 6. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 305,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com. Accenture Experts To discuss any of the ideas presented in this paper please contact: Sigrid Seibold Managing Director Capital Markets, New York sigrid.seibold@accenture.com +1 917 453 9981 Ciara O’Leary Capital Markets, London ciara.d.oleary@accenture.com +44 20 335 2752 Disclaimer This report has been prepared by and is distributed by Accenture. This document is for information purposes. No part of this document may be reproduced in any manner without the written permission of Accenture. While we take precautions to ensure that the source and the information we base our judgments on is reliable, we do not represent that this information is accurate or complete and it should not be relied upon as such. It is provided with the understanding that Accenture is not acting in a fiduciary capacity. Opinions expressed herein are subject to change without notice. Copyright © 2014 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.