In an environment of shrinking margins, capital and liquidity constraints, and efficiency challenges, banks are rethinking their wholesale banking operating model.
We see four distinct models emerging, centred around: (1) global universal banking, (2) global investment banking & wealth management, (3) a blend of electronic and high margin business, and (4) regional universal banking.
Whichever strategy is adopted, efficient client coverage, tech & ops excellence and clarity of strategy will be key for success.
THE BANKING CHALLENGES AND OPPORTUNITIES IN CENTRAL AND EASTERN EUROPE László Árvai
Robert Wright, CEO of Raiffeisen Bank Kosovo, discusses the banking challenges and opportunities in Central and Eastern Europe. He notes that while the "golden days" of high growth from 2003-2007 are over due to increased regulation and the aftermath of the financial crisis, there are still opportunities for banks. New regulations have reduced bank income and profitability, but banks can focus on cost reduction, changing their offerings to meet new customer demands like digital banking, and pursuing growth opportunities among affluent customers and the unbanked population. However, banks also face threats from new fintech entrants and will need to adapt to changing demographics and customer expectations to remain competitive.
This document provides an overview of the banking industry. It defines the main categories of financial institutions as investment banks, retail banks, central banks, and commercial banks. It describes the different types of banks such as universal banks, large banks, investment banks, community banks, online banks, credit unions, building societies, and savings and loans associations. The document also outlines the various banking services provided to different types of clients and how financial institutions generate returns. Finally, it discusses some common banking careers.
Credit Risk Losses | Real Losses Are they inconsistent?László Árvai
Focusing on:
• Contracting a new deal
• Good and properous customer relationship
• To have nice conversation
• Learn all the needs of his client
• Write a loan application
• Fill in the forms of the system
• Cope with all the compliance „handicaps“
• Analyse the business plan, the forecast, …
This document discusses international banking and money markets. It differentiates between domestic and international bank operations, outlining various types of international banking offices like correspondent banks, representative offices, foreign branches, and offshore banking centers. It also covers international money markets, describing instruments like eurocurrency, eurocredits, forward rate agreements, euronotes, and eurocommercial paper. The document concludes by discussing international debt crises, debt-for-equity swaps, the Japanese banking crisis, and the Asian financial crisis.
This document analyzes the finance, marketing, and operations of ING Direct, an online banking service. It discusses ING Direct's financial performance from 2006-2008, including decreasing profits. The marketing strategy of focusing on savings is examined. Operations are analyzed using a service-profit chain model. Recommendations include improving the current ratio and capitalizing on ING Direct's reputation during the economic downturn.
The document discusses digitization strategies in corporate banking. It outlines Credit Suisse's corporate and institutional clients division, which serves over 800 corporate groups. It notes the importance of digitization to improve top-line revenue and achieve cost efficiencies. Examples provided include a portfolio cockpit app and a corporate cash manager app. The document also discusses trends in digital banking technologies and the need for integrated solutions across devices to meet corporate client demands.
Correspondent banking allows banks to serve customers in foreign markets where they do not have a physical presence. Through a correspondent banking relationship, banks provide services like money transfers, foreign exchange, and trade finance for each other. Both banks maintain balances in each other's accounts. Nostro and Vostro accounts refer to a bank's foreign currency accounts at banks in other countries that facilitate international transactions. SWIFT, CHIPS, CHAPS, and Fedwire are important electronic funds transfer systems that allow for fast and secure international money transfers between banks.
- The Small Business loan segment in Indonesia, defined as loans between Rp50-200 million, represents a significant opportunity for banks to double their market capitalization.
- The segment is currently underpenetrated, with only 25% of potential customers currently being served. Customers in this segment are also not very price sensitive.
- To capture this opportunity, banks need to develop a new delivery model combining acquisition of existing banks and building new "Units" to specifically target Small Businesses and their simple needs around accessibility, convenience, and simplicity.
- Developing 600 new Units could allow one bank to gain 20% market share in the Mass Market, representing around Rp10 trillion in assets. The potential profit
THE BANKING CHALLENGES AND OPPORTUNITIES IN CENTRAL AND EASTERN EUROPE László Árvai
Robert Wright, CEO of Raiffeisen Bank Kosovo, discusses the banking challenges and opportunities in Central and Eastern Europe. He notes that while the "golden days" of high growth from 2003-2007 are over due to increased regulation and the aftermath of the financial crisis, there are still opportunities for banks. New regulations have reduced bank income and profitability, but banks can focus on cost reduction, changing their offerings to meet new customer demands like digital banking, and pursuing growth opportunities among affluent customers and the unbanked population. However, banks also face threats from new fintech entrants and will need to adapt to changing demographics and customer expectations to remain competitive.
This document provides an overview of the banking industry. It defines the main categories of financial institutions as investment banks, retail banks, central banks, and commercial banks. It describes the different types of banks such as universal banks, large banks, investment banks, community banks, online banks, credit unions, building societies, and savings and loans associations. The document also outlines the various banking services provided to different types of clients and how financial institutions generate returns. Finally, it discusses some common banking careers.
Credit Risk Losses | Real Losses Are they inconsistent?László Árvai
Focusing on:
• Contracting a new deal
• Good and properous customer relationship
• To have nice conversation
• Learn all the needs of his client
• Write a loan application
• Fill in the forms of the system
• Cope with all the compliance „handicaps“
• Analyse the business plan, the forecast, …
This document discusses international banking and money markets. It differentiates between domestic and international bank operations, outlining various types of international banking offices like correspondent banks, representative offices, foreign branches, and offshore banking centers. It also covers international money markets, describing instruments like eurocurrency, eurocredits, forward rate agreements, euronotes, and eurocommercial paper. The document concludes by discussing international debt crises, debt-for-equity swaps, the Japanese banking crisis, and the Asian financial crisis.
This document analyzes the finance, marketing, and operations of ING Direct, an online banking service. It discusses ING Direct's financial performance from 2006-2008, including decreasing profits. The marketing strategy of focusing on savings is examined. Operations are analyzed using a service-profit chain model. Recommendations include improving the current ratio and capitalizing on ING Direct's reputation during the economic downturn.
The document discusses digitization strategies in corporate banking. It outlines Credit Suisse's corporate and institutional clients division, which serves over 800 corporate groups. It notes the importance of digitization to improve top-line revenue and achieve cost efficiencies. Examples provided include a portfolio cockpit app and a corporate cash manager app. The document also discusses trends in digital banking technologies and the need for integrated solutions across devices to meet corporate client demands.
Correspondent banking allows banks to serve customers in foreign markets where they do not have a physical presence. Through a correspondent banking relationship, banks provide services like money transfers, foreign exchange, and trade finance for each other. Both banks maintain balances in each other's accounts. Nostro and Vostro accounts refer to a bank's foreign currency accounts at banks in other countries that facilitate international transactions. SWIFT, CHIPS, CHAPS, and Fedwire are important electronic funds transfer systems that allow for fast and secure international money transfers between banks.
- The Small Business loan segment in Indonesia, defined as loans between Rp50-200 million, represents a significant opportunity for banks to double their market capitalization.
- The segment is currently underpenetrated, with only 25% of potential customers currently being served. Customers in this segment are also not very price sensitive.
- To capture this opportunity, banks need to develop a new delivery model combining acquisition of existing banks and building new "Units" to specifically target Small Businesses and their simple needs around accessibility, convenience, and simplicity.
- Developing 600 new Units could allow one bank to gain 20% market share in the Mass Market, representing around Rp10 trillion in assets. The potential profit
Accenture Capital Markets- serving many masters - Top 10 Challenges 2013Karl Meekings
Regulators in multiple jurisdictions have implemented varying regulations in response to the 2009 financial crisis, creating challenges for investment banks operating in multiple countries. The regulations differ between countries in areas like capital requirements, derivatives trading, and separating retail and investment banking. This complex global regulatory landscape, coupled with reshuffling of financial supervisors, requires investment banks to build new relationships and change structures. To effectively manage these regulatory changes, banks must take a holistic view of regulations globally, understand the cumulative impacts, integrate stress testing into decision making, appoint a high-level executive to lead compliance, and automate regulatory processes.
The document discusses how universal banks can restore profitability and rebuild capital in response to new regulatory requirements from the Independent Commission on Banking. It identifies four key steps banks need to take: 1) Analyze the implications of ring-fencing requirements to determine their new business model, products, and services; 2) Understand their accurate cost of capital to develop a profitable pricing strategy; 3) Focus on efficiency by managing risk-weighted assets and driving operational realignments; 4) Identify growth opportunities by selecting optimal client, product, and market mixes. Taking these steps will help banks optimize their use of capital and positioning for high performance in the future regulated environment.
The New Hedge Fund-Prime Broker RelationshipBroadridge
The financial crisis has changed the relationship between hedge funds and prime brokers. With the default of some leading providers, funds have realized that they should diversify their prime broker relationships and require more transparency on operational processes of prime providers. However, as the funds industry regains momentum, they are looking to their prime brokers to provide services that will support business expansion. Hence, prime brokers need to adapt their offering and IT infrastructure to respond to the changing market.
Retail Banking Trends - A Critical MomentThe Stockker
Trends, Deresgulation / re-regulation, Retail Banking, Opportunities and Challenges, The 20 largest banks in the world, Top 15 Core Banking System Vendors, Top Banking Software / Vendors, Domestic Strategic Option, Cross Border Economies and Synergies.
The retail banking industry faces opportunities for growth despite challenges from regulations and competition. Key trends include deregulation, rising competition from other financial institutions, the use of new technologies, and globalization. India represents a major opportunity for growth in retail banking due to its rising middle class and consumer purchasing power. However, banks must innovate, reduce costs, pursue mergers and acquisitions, and protect consumer interests to capitalize on the opportunities in retail banking.
The retail banking industry faces opportunities for growth despite challenges from regulations and competition. Key trends include deregulation, rising competition from other financial institutions, the use of new technologies, and globalization. India represents a major opportunity for retail banking growth due to its expanding economy and middle class. However, banks must innovate, reduce costs, pursue mergers and acquisitions, and protect customer interests to capitalize on the opportunities in retail banking.
Accenture Capital Markets- operating with a restricted balance sheet -Top 10 ...Karl Meekings
New banking regulations are restricting balance sheets and increasing costs, reducing revenue opportunities. Banks face challenges including higher capital requirements, liquidity restrictions, leverage limits, and business model changes. They must optimize capital, manage risk-weighted assets, properly allocate capital and compensation, and potentially change business models. Operational challenges include withstanding new capital charges and optimizing collateral to mitigate regulatory impacts on profitability.
Building the investment bank of the future_PRINT READY_High ResolutionKarl Meekings
Investment banks need to fundamentally reshape their business models to succeed in the future. They must restructure their legal entities, optimize costs, innovate, and focus on a clear strategic vision. This will involve reshaping operations around a new holding company structure, divesting non-core businesses, and defining their goals as a global boutique, regional specialist, or universal bank. Successfully implementing these changes despite regulatory challenges will determine which banks lead in the future.
In the last few years, the financial markets have undergone dramatic change. While some of this is down to natural evolution, much of the change can be directly attributed to new rules introduced in the wake of the 2007 crisis. Regulators, legislators and central bank governors have been determined to avert another bubble bursting or an unexpected event that could threaten markets. Lawmakers have targeted key financial practices for reform, radically altering the expectations and behavior of industry participants. The combination of the Dodd-Frank Act, European Markets Infrastructure Regulation (EMIR), MiFID ll and Basel lll signify the biggest regulatory change in decades. These reforms have resulted in major change to how financial products are traded, settled, collateralized and reported, resulting in deep and ongoing structural changes to the markets.
There is no doubt that these new rules are directly impacting buy-side firms — be they asset managers, hedge funds, insurance companies or pension funds. But while the changes have certainly brought challenges, they have also brought opportunities. Firms that can proactively evaluate structural and operational dislocations in the marketplace and tailor business models to leverage the opportunities while addressing the challenges will be in the best position to stand apart from their competitors. Revised business models call for revisions to supporting processes and systems. Buy-side firms should look to re-architect their processes and technology infrastructure, with a goal to strengthen risk control and oversight, enhance transparency and improve efficiency of front-to-back office control functions.
The credit crisis, and the regulatory response it spawned have fundamentally reshaped financial markets for buy-side firms. But while the changes have brought about challenges, they have also ushered in opportunities. The key to success will be the speed with which firms are able to understand the changing marketplace and adapt their business models to align with the changes.
Regulations are integral to the banking industry, and the extent to which the bank complies with such regulations not just maintains its bottom line in terms of avoiding hefty fines, but also has a big bearing on credibility and integrity. So how do banks comply with all that is required, and save themselves from the ill-effects of non-compliance?
Next Generation Integrated Treasury and Trading for Energy and Commodity Comp...CTRM Center
Energy producers, traders and consumers today face a challenging trading environment with more regulatory oversight, lower prices, increasing costs and almost constant volatility. As a result forward thinking energy companies are already adopting a more closely integrated treasury and trading approach, a potentially overlooked opportunity by many. Typically, trading and treasury are separate areas of business with limited or no integration between them. The traders work to sell commodities at the best price or to profit from trading, while the treasury function with its concern over available cash, navigating future investments and doing so in the right currency and at the right location, has a range of responsibilities, including FX and IR hedging, broader credit management, debt and capital management and more. Usually, the treasury department gets a fixed time view of trading positions to work with and can miss opportunities to protect profits or control costs as a result as these exposures change rapidly. Even large oil and gas majors have experienced the situation where trading has a good month but FX rates moved against them to give an entirely different result. Despite believing that they were hedged, FX markets went against the company leaving it with significantly eroded traded profits.
Investment banks face significant challenges including low returns on equity, rising costs, and cultural issues. To transform, investment banks must focus on four pillars: 1) optimize assets and operations by reducing costs and better utilizing resources; 2) transform culture by incentivizing behaviors that benefit clients and shareholders; 3) become client-centric by putting clients at the center; and 4) be technology-led by embracing innovation to improve processes and client services. Only by taking a strategic, transformative approach across these four pillars can investment banks rebuild the industry and achieve sustainable returns on equity of 12-15%.
The document discusses challenges and opportunities in transaction banking. It covers four topics: 1) Building future-proof business and operating models by balancing flexibility and costs. Banks must innovate while managing complexity. 2) Profiting from growth in Asia and new global trade flows by creating optimal geographic footprints. 3) Leading in mobile payments by establishing security, preserving card attractiveness, and forming a strategy on mobile wallets. 4) Capturing opportunities in rapidly developing economies like Brazil and India by innovating in mobile banking and payments and collaborating with partners.
Michael Heine has extensive experience in Australian and European financial markets. He is the Managing Director of netwealth Investments Limited, which he established after his previous company Heine Investment Management was acquired by Mercantile Mutual (now ING) in 1999 for over $115 million when it had almost $3 billion funds under management. Managed accounts provide advisers and clients the ability to invest in one or more professionally managed models with direct ownership of underlying assets, as opposed to managed funds. The benefits of managed accounts become more evident when advisers need to combine multiple models that require regular rebalancing.
This document discusses the growing use of economic capital models and risk-adjusted return on capital (RAROC) in performance management at banks following the 2008 financial crisis. It finds that while most banks now have economic capital models, they are primarily used to evaluate business units rather than individual transactions. There is still room for improvement in using these models to optimally allocate constrained capital resources. The document also examines issues like the granularity of capital allocation, setting RAROC targets and hurdle rates, and linking economic capital to performance management and pricing decisions. Overall, the use of economic capital modeling is gaining acceptance but banks have yet to fully leverage these tools in capital allocation and day-to-day business decisions.
Faced with the challenges of the financial crisis and re-regulation, retail bankers are distracted from the threat of the ‘de-banked consumer’. But, as we argue in our new report, banks’ core competitive advantages are being eroded – and they face some tough choices if they are to stay competitive in the digital age.
For more information, visit http://www.deloitte.co.uk/bankingdisrupted
Tricumen FY17 Capital Markets REGIONS_open 030318Tricumen Ltd
Capital Markets: Regions FY17
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Capital Markets: Overview
The banks in this note reported US$169bn of operating revenue in FY17, 3% below FY16, and US$35bn in 4Q17, -10% y/y. Primary revenue grew, but Equities slipped and - crucially - FY17 FICC dropped 10% y/y. A fall in per-head FICC productivity led to renewed 'rightsizing' initiatives.
Banks (again) matched their costs to revenue: the average cost/income for banks in this report declined, from 82% in FY16 to 79% in FY17, driven by improvement in FICC and Banking.
Opinions on the impact of MiFID 2 vary widely; we expect it will be significant. For example, when TRACE reporting was introduced in the US, the added transparency on volumes traded (and hence flows) let to a c.30% reduction in bid-offer (or equivalent) margins. A similar phenomenon may be seen in MiFID 2, as it applies to most of the high-volume fixed income instruments. The exact margin reduction is likely to be smaller, as increased use of electronic markets means that the European markets are already more transparent than the US markets were at the time TRACE reports were introduced; still, we would not be surprised to see margin compression of 10-15% with a commensurate impact on revenues.
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Similar to Tricumen / Future Models in Wholesale Banking 100915
Accenture Capital Markets- serving many masters - Top 10 Challenges 2013Karl Meekings
Regulators in multiple jurisdictions have implemented varying regulations in response to the 2009 financial crisis, creating challenges for investment banks operating in multiple countries. The regulations differ between countries in areas like capital requirements, derivatives trading, and separating retail and investment banking. This complex global regulatory landscape, coupled with reshuffling of financial supervisors, requires investment banks to build new relationships and change structures. To effectively manage these regulatory changes, banks must take a holistic view of regulations globally, understand the cumulative impacts, integrate stress testing into decision making, appoint a high-level executive to lead compliance, and automate regulatory processes.
The document discusses how universal banks can restore profitability and rebuild capital in response to new regulatory requirements from the Independent Commission on Banking. It identifies four key steps banks need to take: 1) Analyze the implications of ring-fencing requirements to determine their new business model, products, and services; 2) Understand their accurate cost of capital to develop a profitable pricing strategy; 3) Focus on efficiency by managing risk-weighted assets and driving operational realignments; 4) Identify growth opportunities by selecting optimal client, product, and market mixes. Taking these steps will help banks optimize their use of capital and positioning for high performance in the future regulated environment.
The New Hedge Fund-Prime Broker RelationshipBroadridge
The financial crisis has changed the relationship between hedge funds and prime brokers. With the default of some leading providers, funds have realized that they should diversify their prime broker relationships and require more transparency on operational processes of prime providers. However, as the funds industry regains momentum, they are looking to their prime brokers to provide services that will support business expansion. Hence, prime brokers need to adapt their offering and IT infrastructure to respond to the changing market.
Retail Banking Trends - A Critical MomentThe Stockker
Trends, Deresgulation / re-regulation, Retail Banking, Opportunities and Challenges, The 20 largest banks in the world, Top 15 Core Banking System Vendors, Top Banking Software / Vendors, Domestic Strategic Option, Cross Border Economies and Synergies.
The retail banking industry faces opportunities for growth despite challenges from regulations and competition. Key trends include deregulation, rising competition from other financial institutions, the use of new technologies, and globalization. India represents a major opportunity for growth in retail banking due to its rising middle class and consumer purchasing power. However, banks must innovate, reduce costs, pursue mergers and acquisitions, and protect consumer interests to capitalize on the opportunities in retail banking.
The retail banking industry faces opportunities for growth despite challenges from regulations and competition. Key trends include deregulation, rising competition from other financial institutions, the use of new technologies, and globalization. India represents a major opportunity for retail banking growth due to its expanding economy and middle class. However, banks must innovate, reduce costs, pursue mergers and acquisitions, and protect customer interests to capitalize on the opportunities in retail banking.
Accenture Capital Markets- operating with a restricted balance sheet -Top 10 ...Karl Meekings
New banking regulations are restricting balance sheets and increasing costs, reducing revenue opportunities. Banks face challenges including higher capital requirements, liquidity restrictions, leverage limits, and business model changes. They must optimize capital, manage risk-weighted assets, properly allocate capital and compensation, and potentially change business models. Operational challenges include withstanding new capital charges and optimizing collateral to mitigate regulatory impacts on profitability.
Building the investment bank of the future_PRINT READY_High ResolutionKarl Meekings
Investment banks need to fundamentally reshape their business models to succeed in the future. They must restructure their legal entities, optimize costs, innovate, and focus on a clear strategic vision. This will involve reshaping operations around a new holding company structure, divesting non-core businesses, and defining their goals as a global boutique, regional specialist, or universal bank. Successfully implementing these changes despite regulatory challenges will determine which banks lead in the future.
In the last few years, the financial markets have undergone dramatic change. While some of this is down to natural evolution, much of the change can be directly attributed to new rules introduced in the wake of the 2007 crisis. Regulators, legislators and central bank governors have been determined to avert another bubble bursting or an unexpected event that could threaten markets. Lawmakers have targeted key financial practices for reform, radically altering the expectations and behavior of industry participants. The combination of the Dodd-Frank Act, European Markets Infrastructure Regulation (EMIR), MiFID ll and Basel lll signify the biggest regulatory change in decades. These reforms have resulted in major change to how financial products are traded, settled, collateralized and reported, resulting in deep and ongoing structural changes to the markets.
There is no doubt that these new rules are directly impacting buy-side firms — be they asset managers, hedge funds, insurance companies or pension funds. But while the changes have certainly brought challenges, they have also brought opportunities. Firms that can proactively evaluate structural and operational dislocations in the marketplace and tailor business models to leverage the opportunities while addressing the challenges will be in the best position to stand apart from their competitors. Revised business models call for revisions to supporting processes and systems. Buy-side firms should look to re-architect their processes and technology infrastructure, with a goal to strengthen risk control and oversight, enhance transparency and improve efficiency of front-to-back office control functions.
The credit crisis, and the regulatory response it spawned have fundamentally reshaped financial markets for buy-side firms. But while the changes have brought about challenges, they have also ushered in opportunities. The key to success will be the speed with which firms are able to understand the changing marketplace and adapt their business models to align with the changes.
Regulations are integral to the banking industry, and the extent to which the bank complies with such regulations not just maintains its bottom line in terms of avoiding hefty fines, but also has a big bearing on credibility and integrity. So how do banks comply with all that is required, and save themselves from the ill-effects of non-compliance?
Next Generation Integrated Treasury and Trading for Energy and Commodity Comp...CTRM Center
Energy producers, traders and consumers today face a challenging trading environment with more regulatory oversight, lower prices, increasing costs and almost constant volatility. As a result forward thinking energy companies are already adopting a more closely integrated treasury and trading approach, a potentially overlooked opportunity by many. Typically, trading and treasury are separate areas of business with limited or no integration between them. The traders work to sell commodities at the best price or to profit from trading, while the treasury function with its concern over available cash, navigating future investments and doing so in the right currency and at the right location, has a range of responsibilities, including FX and IR hedging, broader credit management, debt and capital management and more. Usually, the treasury department gets a fixed time view of trading positions to work with and can miss opportunities to protect profits or control costs as a result as these exposures change rapidly. Even large oil and gas majors have experienced the situation where trading has a good month but FX rates moved against them to give an entirely different result. Despite believing that they were hedged, FX markets went against the company leaving it with significantly eroded traded profits.
Investment banks face significant challenges including low returns on equity, rising costs, and cultural issues. To transform, investment banks must focus on four pillars: 1) optimize assets and operations by reducing costs and better utilizing resources; 2) transform culture by incentivizing behaviors that benefit clients and shareholders; 3) become client-centric by putting clients at the center; and 4) be technology-led by embracing innovation to improve processes and client services. Only by taking a strategic, transformative approach across these four pillars can investment banks rebuild the industry and achieve sustainable returns on equity of 12-15%.
The document discusses challenges and opportunities in transaction banking. It covers four topics: 1) Building future-proof business and operating models by balancing flexibility and costs. Banks must innovate while managing complexity. 2) Profiting from growth in Asia and new global trade flows by creating optimal geographic footprints. 3) Leading in mobile payments by establishing security, preserving card attractiveness, and forming a strategy on mobile wallets. 4) Capturing opportunities in rapidly developing economies like Brazil and India by innovating in mobile banking and payments and collaborating with partners.
Michael Heine has extensive experience in Australian and European financial markets. He is the Managing Director of netwealth Investments Limited, which he established after his previous company Heine Investment Management was acquired by Mercantile Mutual (now ING) in 1999 for over $115 million when it had almost $3 billion funds under management. Managed accounts provide advisers and clients the ability to invest in one or more professionally managed models with direct ownership of underlying assets, as opposed to managed funds. The benefits of managed accounts become more evident when advisers need to combine multiple models that require regular rebalancing.
This document discusses the growing use of economic capital models and risk-adjusted return on capital (RAROC) in performance management at banks following the 2008 financial crisis. It finds that while most banks now have economic capital models, they are primarily used to evaluate business units rather than individual transactions. There is still room for improvement in using these models to optimally allocate constrained capital resources. The document also examines issues like the granularity of capital allocation, setting RAROC targets and hurdle rates, and linking economic capital to performance management and pricing decisions. Overall, the use of economic capital modeling is gaining acceptance but banks have yet to fully leverage these tools in capital allocation and day-to-day business decisions.
Faced with the challenges of the financial crisis and re-regulation, retail bankers are distracted from the threat of the ‘de-banked consumer’. But, as we argue in our new report, banks’ core competitive advantages are being eroded – and they face some tough choices if they are to stay competitive in the digital age.
For more information, visit http://www.deloitte.co.uk/bankingdisrupted
Similar to Tricumen / Future Models in Wholesale Banking 100915 (20)
Tricumen FY17 Capital Markets REGIONS_open 030318Tricumen Ltd
Capital Markets: Regions FY17
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Capital Markets: Overview
The banks in this note reported US$169bn of operating revenue in FY17, 3% below FY16, and US$35bn in 4Q17, -10% y/y. Primary revenue grew, but Equities slipped and - crucially - FY17 FICC dropped 10% y/y. A fall in per-head FICC productivity led to renewed 'rightsizing' initiatives.
Banks (again) matched their costs to revenue: the average cost/income for banks in this report declined, from 82% in FY16 to 79% in FY17, driven by improvement in FICC and Banking.
Opinions on the impact of MiFID 2 vary widely; we expect it will be significant. For example, when TRACE reporting was introduced in the US, the added transparency on volumes traded (and hence flows) let to a c.30% reduction in bid-offer (or equivalent) margins. A similar phenomenon may be seen in MiFID 2, as it applies to most of the high-volume fixed income instruments. The exact margin reduction is likely to be smaller, as increased use of electronic markets means that the European markets are already more transparent than the US markets were at the time TRACE reports were introduced; still, we would not be surprised to see margin compression of 10-15% with a commensurate impact on revenues.
Capital Markets: Overview
The 13 capital markets banks featured in this note reported 3Q17 revenue of $41bn, 8% below 3Q16. In 9m17, revenue totalled $133bn, unchanged from the prior-year period. Banks' pre-reporting guidance on 15-20% y/y decline in sales and trading revenue was spot-on; but strong issuance and advisory softened the blow somewhat...
... as did banks' careful control of costs, which fell exactly in line with revenue, in 3Q17 and year-to-date. FICC bore the brunt of costs reduction in 3Q17, although the overall headcount remained almost unchanged vs prior year; equities costs were slightly lower, and the cost base of primary issuance and advisory units was unchanged vs 3Q16.
As a result, banks' year-to-date pre-tax profits rose by 13% y/y. European banks' overall profit dynamics matched that of US banks, largely on increased profitability in issuance and advisory; US banks, however, outperformed Europeans in both FICC and Equities.
Commercial/Transaction Banking
In the US, after steadily growing since mid-2016, the volume of new commercial banking loans levelled out in 3Q17. Margins flattened, remaining the same as the previous quarter. In Europe, demand for commercial loans strengthened, especially in France; across the EU countries, margins varied greatly but were in aggregate below 3Q16 levels.
In treasury services, payment volumes continued to grow year-on-year, though at a much slower pace than was the case in 1H17. Trade finance activity remained constrained, with markets falling again slightly. Regionally, Europe posted the strongest growth, followed by the Americas and then APAC.
Wealth Management
The six banks in this note reported 9m17 revenue of US$27bn, 7% ahead of the prior-year period, with all four major revenue streams advancing at a healthy clip. Despite the continued and acknowledged industry-wide pressure on margins, banks' combined 9m17 pre-tax profit jumped by 20% y/y.
Banks' hiring in APAC continues, but there are signs of slowdown, largely as the result of increased competition for talent. Among the banks mentioned included in this report, UBS and J.P.Morgan are taking the long view. UBS (with just over 1,000 client advisors, most of whom focus on UHNWs) is finding talent outside of the private banking industry, then trains them internally; it targets c.250. Similarly, J.P.Morgan favours training and promoting internal talent; the bank's end-target is c.600 regional staff, in small steps. Credit Suisse, by contrast, visibly scaled down the extent of its regional ambition. Finally, Citi and Morgan Stanley made no change to their hiring targets, but plan to hire far less than others.
Tricumen 6m17 Capital Markes: Regions_open 300817Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Tricumen 1Q17 Capital Markets: Regions_310517Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Tricumen FY16 Capital Markets Regions_open 100317Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Capital Markets: Overview
The FY16 revenue of Top 13 investment banks reached $172bn, -2% vs FY15. European banks continue to lose ground: while the US banks grew revenue 2% (4Q16: 17%), EMEA banks' fell 8%. The US banks' lead is even more stark in terms of profitability: their FY16 pre-tax profits surged 44% (and more than doubled in FICC), while Europeans' profits were unchanged as the plunge in FICC profits (partly due to litigation hits) more than offset healthy profits in Banking and Equities.
Global banks reacted quickly to British Prime Minister's announcement that the UK will be leaving the EU single market. Goldman Sachs will shift personnel to Frankfurt, Poland, France and Spain; UBS already started moving staff, 300 of which may go to Spain and many more elsewhere; Citi chose Dublin (900 staff) and Frankfurt, as did Morgan Stanley (300); HSBC may move staff who generate 20% of capital markets revenue to Paris; Lloyds Banking Group picked Berlin for its EU hub; the list goes on. Support roles are most at risk, followed by the front-line equity and rates derivatives. However, top executives reportedly mentioned that Euro swaps clearing business may stay in London, as imposing controls on the currency may damage its reserve status.
Commercial/Transaction Banking
Following a steep growth in loans in 1H17, commercial lending volumes steadied in 4Q16. Banks raised interest rates in December, a move which has continued into January.
In Treasury services, FY16 payments grew 7% y/y with APAC and Americas being the greatest beneficiaries. Trade finance volumes declined 6% y/y in FY16 in the wake of weaker APAC economies and protectionist sentiment in the US and parts of Europe. Citigroup is considering changing its transaction banking platform from 'hub-and-spoke model' to a 'network model' in the light of the Trump administration’s protectionist leanings with regard to global trade. J.P.Morgan is building out its corporate banking presence in southeastern US - and making senior hires.
Wealth Management
Lending revenues grew by 35% y/y in FY16 on higher interest rates.
Investment management and brokerage assets at banks grew by 6-9% FY16/FY15 in the US. The growth in Europe was a more muted 3%; this was partly due to investors - spooked by the political uncertainty surrounding various political events in Europe - being reluctant to invest in fee-earning products. APAC remains a more complex and fluid market, with investors favouring direct, co-investments, such as venture capital, private equity and real estate. APAC recorded the world's highest growth rate in AuM in FY16; some of the banks we track grew market share aggressively and growing AuM at double-digit rates, while others lost ground.
Tricumen 9m16 Capital Markets Regions_OPEN 121216Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
CAPITAL MARKETS
Capital markets’ operating revenue totalled US$132bn in 9m16, 5% below the prior-year period. FICC rates and credit outperformed in 3Q16; primary fees and Equities trading revenue declined vs 3Q15; and FICC prop trading jumped 13% as traders capitalised on market volatility. Banks demonstrated strong cost control: 9m16 operating pre-tax profit fell only 2% y/y. At end-9m16, FICC and Equities front-office headcount was 6% and 5% below 9m15, respectively.
Three recent developments are net positive for banks. Regulators in Europe and Japan are siding with banks and are threatening ‘mutiny’ over 'Basel 4'; the industry claims that proposed revisions would hit some regions (Europe) more than others (USA), and regional regulators are very supportive. In the USA, the President-elect Trump seems determined to repel portions of Dodd-Frank. Finally, rumours emerged that some US banks are considering a legal challenge to aspects of the Fed's annual stress tests; even a mention of a legal challenge is extraordinary.
COMMERCIAL/TRANSACTION BANKING
Commercial banking in the USA benefitted from the improvement in net interest margins and an increase in lending activity. This trend was repeated in most major economies across the globe with the mid-cap/SME segment outperforming the large-cap/MNC.
In treasury services, a 6% y/y decline in trade finance activity, caused by weaker trade flows along APAC trade corridors, depressed revenues. This was, however, more than offset by improved payments flows and liquidity management.
WEALTH MANAGEMENT
APAC continues to produce great challenges, but also long-term opportunities. Banks - Credit Suisse and UBS in particular - continue their heavy investment in the region, but compliance concerns are causing some to shed low-yielding clients. In October, Deutsche Bank's former Head of APAC wealth management Ravi Raju, the key architect of the bank's wealth management operation in the region, left to join UBS.
Lending volumes continued to grow, driven by clients' demand for relatively cheap financing.
Investment management and brokerage 3Q16 revenue declined versus the prior-year period, due to client's cautious investment behaviour. As volatility returns to the markets, investment revenues may well recover.
Tricumen 6m16 Capital Markets Results Review_Regions_OPEN 010916Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
This issue features reorganised definitions for several FICC products.
Tricumen 2Q16 Capital Markes Results Review_open 290816Tricumen Ltd
The 1H16 operating revenue reported by banks in this report totalled $86bn. This was 14% below 1H15. 2Q16 totalled $31bn, 12% down versus a prior-year period. In US dollar terms, issuance and advisory fees dropped 28% vs 2Q15 and equities by 20%, while FICC was essentially flat, with several banks reporting a surge in revenue spurred by Brexit. US banks increased their share of the peer group's pre-tax profit.
European Banking Authority's (EBA) stress test, published in July, managed to satisfy almost no-one: some deemed it too benign, others unrealistic. Both arguments make sense: EBA's test did not include sovereign defaults, mitigating actions by banks, Brexit, or an extended period of low-interest rate environment. Also, the EBA's test focuses on prudential regulatory measures which, in our view, do not reflect true market risks - and those, if the US regulators have their way, could feature in Basel 4, along with stronger capital rules for bank leverage.
This issue features reorganised definitions for several FICC products.
Tricumen / Capital Markets: Regions 1Q16_open 260516Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Tricumen / 1Q16 Capital Markets Results Review_openTricumen Ltd
The document summarizes capital markets results for major banks in 1Q16 compared to 1Q15. It finds that overall operating revenue dropped 25% year-over-year, with weakness seen across fixed income, currencies and commodities as well as debt capital markets. Front office productivity also declined despite job cuts in those areas. Profits fell even more sharply than revenue, with pre-tax profit dropping 30% overall. European banks faced additional challenges from regulations capping bonuses, which increased fixed costs. Specific business lines like credit trading and securitization saw especially steep declines.
Tricumen / Credit Suisse: Restructuring EMEA and Americas_290316Tricumen Ltd
Credit Suisse's Mar-16 Strategy Update failed to immediately reassure investors. The bank expects a 40-45% year-on-year drop in Global Markets' trading revenue, and a loss in 1Q16
In our view, Credit Suisse has the 'wrong kind of fixed income' for their strategy and current markets
Tricumen / FY15 Capital Markets: Regions_open 080316Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks' capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment revenue allocations, RWA and Equity.
All data is reconciled against the published financial statements. Further detail is available on request.
Standard Chartered_credit risk management 140116Tricumen Ltd
Standard Chartered – credit risk management
The collapse of Standard Chartered’s ROE over the past three years was largely caused by rising impairment costs. In our view, the growth in impairments suggests that there are issues with the bank's risk management, rather than with the underlying business proposition.
The bank's current approach appears fragmented and lacks some of the dynamic techniques used to create a 'fortress balance sheet' of top-tier global universal banks.
The new senior management team appears well placed to effect such changes. The bank is undergoing a major strategic review, the focus of which is its local corporate and commercial banking franchise in key markets.
Tricumen / Barclays Investment Bank_extending the cuts_151215Tricumen Ltd
Barclays Investment Bank: extending the cuts
Barclays remains focused on underlying profitability. Historically, however, the bank's main challenge was revenue generation, rather than cost control.
Our analysis highlights APAC equities, global credit, EMEA securitisation and US commodities as key areas of weak profitability.
Tricumen / M&A boutiques vs globals_101215Tricumen Ltd
- Boutique M&A firms weathered the post-financial crisis period better than large global banks, but have higher costs.
- While boutiques saw steady growth after a slight dip in 2009, revenues for large global banks took several years to recover.
- Looking forward, as M&A markets remain healthy, large US global banks are expected to continue gaining market share from European banks and boutique firms.
Tricumen / Capital Markets Regions 6m15_open 230815Tricumen Ltd
This document summarizes capital markets performance for major banks in EMEA and Americas regions in the first half of 2015. It shows quarterly revenue and pre-tax profit market share changes compared to peers, highlights top and bottom performers in revenue growth by product area, and analyzes operating cost ratios, productivity and profitability metrics.
Tricumen / Capital Markets: Regions 1Q15Tricumen Ltd
This publication is supplementary to our quarterly Results Review; it shows banks’ revenue dynamics relative to their peers in each region and each product area. The full dataset includes operating revenue at the Level 3 product detail, operating expenses and pre-tax profit in 7 regions, as well as client segment revenue allocations.
All data is reconciled against the published financial statements. Further detail is available on request.
Codeless Generative AI Pipelines
(GenAI with Milvus)
https://ml.dssconf.pl/user.html#!/lecture/DSSML24-041a/rate
Discover the potential of real-time streaming in the context of GenAI as we delve into the intricacies of Apache NiFi and its capabilities. Learn how this tool can significantly simplify the data engineering workflow for GenAI applications, allowing you to focus on the creative aspects rather than the technical complexities. I will guide you through practical examples and use cases, showing the impact of automation on prompt building. From data ingestion to transformation and delivery, witness how Apache NiFi streamlines the entire pipeline, ensuring a smooth and hassle-free experience.
Timothy Spann
https://www.youtube.com/@FLaNK-Stack
https://medium.com/@tspann
https://www.datainmotion.dev/
milvus, unstructured data, vector database, zilliz, cloud, vectors, python, deep learning, generative ai, genai, nifi, kafka, flink, streaming, iot, edge
Learn SQL from basic queries to Advance queriesmanishkhaire30
Dive into the world of data analysis with our comprehensive guide on mastering SQL! This presentation offers a practical approach to learning SQL, focusing on real-world applications and hands-on practice. Whether you're a beginner or looking to sharpen your skills, this guide provides the tools you need to extract, analyze, and interpret data effectively.
Key Highlights:
Foundations of SQL: Understand the basics of SQL, including data retrieval, filtering, and aggregation.
Advanced Queries: Learn to craft complex queries to uncover deep insights from your data.
Data Trends and Patterns: Discover how to identify and interpret trends and patterns in your datasets.
Practical Examples: Follow step-by-step examples to apply SQL techniques in real-world scenarios.
Actionable Insights: Gain the skills to derive actionable insights that drive informed decision-making.
Join us on this journey to enhance your data analysis capabilities and unlock the full potential of SQL. Perfect for data enthusiasts, analysts, and anyone eager to harness the power of data!
#DataAnalysis #SQL #LearningSQL #DataInsights #DataScience #Analytics
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...Social Samosa
The Modern Marketing Reckoner (MMR) is a comprehensive resource packed with POVs from 60+ industry leaders on how AI is transforming the 4 key pillars of marketing – product, place, price and promotions.
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The Building Blocks of QuestDB, a Time Series Databasejavier ramirez
Talk Delivered at Valencia Codes Meetup 2024-06.
Traditionally, databases have treated timestamps just as another data type. However, when performing real-time analytics, timestamps should be first class citizens and we need rich time semantics to get the most out of our data. We also need to deal with ever growing datasets while keeping performant, which is as fun as it sounds.
It is no wonder time-series databases are now more popular than ever before. Join me in this session to learn about the internal architecture and building blocks of QuestDB, an open source time-series database designed for speed. We will also review a history of some of the changes we have gone over the past two years to deal with late and unordered data, non-blocking writes, read-replicas, or faster batch ingestion.
STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...sameer shah
"Join us for STATATHON, a dynamic 2-day event dedicated to exploring statistical knowledge and its real-world applications. From theory to practice, participants engage in intensive learning sessions, workshops, and challenges, fostering a deeper understanding of statistical methodologies and their significance in various fields."
Beyond the Basics of A/B Tests: Highly Innovative Experimentation Tactics You...Aggregage
This webinar will explore cutting-edge, less familiar but powerful experimentation methodologies which address well-known limitations of standard A/B Testing. Designed for data and product leaders, this session aims to inspire the embrace of innovative approaches and provide insights into the frontiers of experimentation!
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data LakeWalaa Eldin Moustafa
Dynamic policy enforcement is becoming an increasingly important topic in today’s world where data privacy and compliance is a top priority for companies, individuals, and regulators alike. In these slides, we discuss how LinkedIn implements a powerful dynamic policy enforcement engine, called ViewShift, and integrates it within its data lake. We show the query engine architecture and how catalog implementations can automatically route table resolutions to compliance-enforcing SQL views. Such views have a set of very interesting properties: (1) They are auto-generated from declarative data annotations. (2) They respect user-level consent and preferences (3) They are context-aware, encoding a different set of transformations for different use cases (4) They are portable; while the SQL logic is only implemented in one SQL dialect, it is accessible in all engines.
#SQL #Views #Privacy #Compliance #DataLake
Predictably Improve Your B2B Tech Company's Performance by Leveraging DataKiwi Creative
Harness the power of AI-backed reports, benchmarking and data analysis to predict trends and detect anomalies in your marketing efforts.
Peter Caputa, CEO at Databox, reveals how you can discover the strategies and tools to increase your growth rate (and margins!).
From metrics to track to data habits to pick up, enhance your reporting for powerful insights to improve your B2B tech company's marketing.
- - -
This is the webinar recording from the June 2024 HubSpot User Group (HUG) for B2B Technology USA.
Watch the video recording at https://youtu.be/5vjwGfPN9lw
Sign up for future HUG events at https://events.hubspot.com/b2b-technology-usa/