New digital ecosystem
Investment banking firms are under pressure from all sides. Non-traditional competitors, commoditization and new competitive threats combine with cost-cutting that has reached the point of diminishing returns. Complex, inflexible operating and technology platforms make innovation difficult.
As Technology consumerization continues, flexible sourcing of people, infrastructure, software and information—using cloud computing and “everything as a service” (XaaS)—has converged with new design, development and deployment approaches and tools.
The central investment banking concept is changing. Big ideas come from unexpected places. A digital ecosystem is emerging—one that depends on the customers, capabilities and value proposition of each firm.
Cost reduction, compliance and restructuring have trumped the development of new client-centric ideas and served as barriers to innovation.
Moving to an integrated digital ecosystem is an imperative. Successful firms will combine financial expertise with digital sophistication to deliver value to customers and differentiate from the competition.
Investment banks are less often at the forefront of new ideas: Banks are devoting three times as much money to maintaining legacy systems as they are to building new platforms needed for growth.
Investment banks need external collaborations to improve business operations: In particular, introduce systems to support new products and better customer service.
Investment banks must accept the changing nature of technology providers: Many providers see their role as helping to define and satisfy end-client expectations and overall customer experience.
Investment banks must access deep talent pools: Attracting promising new entrants and adopting new technologies enables innovation and scale at minimal cost.
Banks should seek out forward-looking investment.
Redefine clients, value propositions and roles: Understand how value is derived to identify areas for investing, partnering and leveraging third-party innovations.
Embrace modern architectural principles and concepts: Design future products, services and platforms that are experience-driven, service-oriented, collaborative and cloud-based.
Establish a renewed focus on talent: Recruit agile candidates who are focused on design, and create an environment where such individuals thrive and grow.
Encourage and institutionalize innovation: Add board members with a track record of digital success, establish an internal growth council, cultivate promising digital opportunities, and form closer ties with venture capitalists.