THE DYNAMIC LANDSCAPE OF INVESTMENT BANKING
The Investment Banking Industry has become data-driven with the unprecedented health, economic, societal, and social effects of the COVID-19 pandemic. It has instigated a rapid disruption within the world of investment banking such as declining equity prices, liquidity pressure, financial regulations, market democratization,increased sophistication of clients, shifts to remote working and rapid technological advancements.
The Investment Banking industry is set to function in an increasingly interconnected global and possibly virtual ecosystem that will collaborate with partners and end users in the organisation. Industry reforms should provide an opportunity for investment banking institutions to move towards greater returns. Therefore, in order to achieve this, businesses cannot continue to play around the edges. Most likely, they will have to change their existing operations and business models to focus on clients & invest in innovative technologies. The future may require investment banks to shed light on non-core assets and redesign their service offerings such as optimize the data utilisation, financial technology, and analytics to provide unique insights and add value to their services.
The Ever Increasing Role Of Technology In Investment Banking
Technology is crucial to clients, as they expect solid execution. As demonstrated by their advanced trading activities, the Investment Banking Industry is extremely agile and far ahead of retail banks in adapting the role of technology in investment banking setup. The Global IB of the future will be built around an integrated ecosystem consisting of:
- Minimize risk of revenue correlation.
- An alternative client business providing the possibility of recycling risk
- A client model of business that is global in scope
- A well-diversified, large-scale, and liquid sales and trading portfolio.
- A global, top-notch business model that offers significant unexplored business opportunities to develop.
The investment banking sector also faces pressures on cost from economic areas too. Therefore, it is crucial to increase business efficiency to attract and satisfy customers, which can lead to profit. However, there are a few shortcomings such as:
- Inability to manage and analyse big volumes of customer data
- Lack of a robust strategy to drive sales
- Categorize and monitor customer behavior to predict risks
- No development of long-term relationships with customers
- Limited resources of detection and prevention of frauds
To combat this uphill battle, investment banking industries are leveraging big data analytics to get profound insights into the customer data and improve customer satisfaction.
Principal drivers to adopt big data technologies:
- With advancements in technology, consumers are using different types of devices for their transactions. The use of big data helps to combine digital and physical channel interactions and provides the investment bankers to collect, integrate, and analyze all data effectively.
- Unstructured customer data needs to be filtered out. This information may need reassembling to understand the compliance or risk purposes.
- The use of big data tools helps them to analyse data in real time and manage ever-increasing data efficiently.
- Fraud detection and security: Big data helps to conduct analyses on the whole spectrum of data available, and not just on limited areas thereby provisioning and solving fraud detection and identity security risks effectively.
- Customer insight and marketing analytics: Big data technologies enable the banks to collect and integrate transactional and unstructured data, and highlight customer-centric models to give them the benefits of realising customer insights.
In brief, big data technology adoption enables the industry to develop strategies in real time, develop new strategies by adopting data into processes, find unique market opportunities, calibrate pricing models and make informed investment decisions.
Therefore, to maximize the benefits of big data analytics, a company should be committed to its efforts. They should develop a big data blueprint, start with existing data, understand business priorities, build analytical capabilities, and continue advancing analytics applications. This would lead to a continued and measurable outcome and fruitful results.
Depending on your industry’s requirements and the intention, users can choose single or multiple technologies. Here are the four key aspects of big data technology.
- Infrastructure that supports scalability and flexibility to handle the data.
- Effective and efficient data storage with ease of access and management.
- Efficient data processing and management in place
- Data analytics for data visualization.
Big data technologies will continue to shape the future of the investment banking industry, by enabling them to provide timely, cost-effective, and reliable services to clients. Therefore, investment related businesses must prioritize investments and follow a more pragmatic approach and avoid pitfalls to become a differentiator in the market.
