This just in:TOP TEN CHALLENGES FOR INVESTMENT BANKS 2016
The investment banking industry is nearing the end of a decade of change following the financial crisis, and has emerged transformed. Returns have been reduced and the market has fundamentally shifted. Hard decisions have been taken by many banks to withdraw, expand or persevere in specific areas but no organisation has yet managed to filter those strategic choices throughout its business, still less to execute fully on its vision.
Accenture Capital Markets sees execution as the defining challenge over the coming year and indeed the next decade. Identifying a need and making the decision to change is a relatively short-term process; the real challenge is in implementation, especially in large, geographically and culturally disparate firms.
We think banks will split into a proactive group which implements change successfully and a reactive group which struggles to adapt. There is no “one size fits all” model, but three major elements are required for effective transformation:
This year’s collection looks to outline, across ten separate but interconnected challenges, how firms can begin to build the necessary capability for achieving these strategic goals.
The pressure from regulators, politicians and the media on investment banks across all markets has not eased up and continues to define industry challenges. Across securities reform, conduct risk, capital adequacy and a gamut of other topics, regulation is wide-ranging and game-changing. Banks are looking to balance implementation of the required rules and planning for those in the pipeline; but now is the time to recognise the opportunities as well as the challenges.
RestructuringCurrent investment banking business models are not delivering an acceptable level of return to investors. Governance structures, processing and the technology landscape are still unnecessarily complex and impervious to change. Substantial restructuring is required to simplify these areas but also to exploit opportunities and prepare banks for expansion in new locations or with new products.
Investment banks are and should be increasingly searching for new business opportunities. The emergence of industry utilities offers one such opportunity, providing a compelling proposition for homogenous business functions such as post-trade processing or KYC/onboarding. At the other end of the business, embracing innovation in digital technology and analytics will enable banks to find new and exciting ways to deliver and optimise their client service.
Since 2009 we have worked with our clients and our industry experts to predict the challenges investment banks will face in the coming year as the industry landscape changes.
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