Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
1
Balancing Operational Efficiency and Profitability in an Increasingly Connected WorldThe Future of Investment Banking
Disruptive market landscape
Market trends Challenges & opportunities
Digital transformation with HID Global
Introduction
Investment banks need to be making the right decisions now to secure their future if they want to improve security, empower employees, increase profitability and make more money for their clients.
This means balancing process, control, business vision and enablement in an uncertain, rapidly changing world, where technology, security and trends from outside banking are shifting the rules of the game.
People, places and things are increasingly connected. Electronic trading is becoming increasingly important, especially as a differentiator for customers, but supporting it requires profound reform of existing IT systems. Blockchain, Artificial Intelligence (AI), Augmented Reality (AR), Virtual Reality (VR) and automation are shaping new business models which will result in greater efficiency and faster ways to process transactions.
In this hyperconnected world – the instant access to data anytime from anywhere is driving new behaviors. Security is the key, alongside seamless regulatory compliance. While customers, expect financial organizations to provide advanced tools to securely conduct transactions instantly through mobile and digital channels.
Finally, customers are attracted by the highly flexible business models offered by very agile fintechs. To catch up, and also regain customer trust, banks need to rethink existing business models and ways they serve clients.
Staying still is not an option, but it is not all negative. If banks can get this right, if they can improve operational efficiency, effectiveness and security, there are still profits to be made, Returns on Equity (ROE) to be improved and capital to be created for customers.
2
Disruptive market landscape
Need to increase speed of transactions and support decision making process
The growth of mobile leading to a hyperconnected world on the move
Build competitive advantage to boost growth and market presences
Increasingly competitive landscape, with new entrants and actors
Protect digital identities with increased security and technology
Increasing instances of fraud across multiple channels
Increase customer and process protection, while boosting innovation
New regulations
Improve efficiency, automate processes and introduce AI into the ecosystem
Decreasing margins
3
44
Market Trends
5
Client centricity
The relationship between investment banks and their clients is changing – into a more open, visible partnership. This is a process of focusing on client needs, and it is being driven by both sides – the banks want to rebuild trust and improve customer loyalty, while client expectations are also changing.
It is revolutionizing the way the banks evaluate their performance, from a revenue/return model to looking at it from their clients’ perspective and meeting their expectations.
New technology is being introduced to create effective relationship management with user friendly CRM technology, and ePlatforms, to give clients better visibility of what banks are doing with their money. These digital platforms provide customers with performance and predicative analysis, giving them possible risk scenarios, along with short and long-term forecasts, enabling them to manage their portfolio in real-time.
Banks are also responding to client demands for a new type of service by training sales teams to focus on meeting their needs and understanding their clients better.
A client-centric focus has the potential to help investment banks improve profitability, and create new services, but it will not be an easy task.
Drivers Digitization, new technologies and growing connectivity are increasing the vulnerability level of financial institutions. Users are also consumers and they expect banking technology to be easy to use, intuitive and like the technology they use at home.
of customers would pay their bank to know them better, but less than 25% feel their bank understands their financial goals1
20%
33%
of American banks offer advanced personalization to customers1
of American banks offer little or no personalized services1
17%
Trend 1
6
Competitive landscape
Trend 2
Investment banking is becoming more competitive. No longer do just a few firms dominate the worldwide market; new entrants—from start-ups to established companies from other fields—are all looking to provide services to clients.
To stay ahead, banks need to look at areas like:
• Technology – Blockchain is increasingly popular. It is used for areas like payments, fund transfers and trade finance. At the same time, improved data analytics have the potential to help organizations proactively mitigate risk and improve services, to better meet customers’ needs
• Client centricity – banks need to understand what this means for their business and then optimize channels accordingly
• Ecosystem banking – if a bank can carve out a vital role within ecosystem banking, it will safeguard future revenues
of fintechs and financial institutions plan to adopt Blockchain by 20202
of incumbent financial institutions believe business is at risk2
of consumers plan to continue using traditional service providers2
88%
77%
39%
Drivers According to PwC2 most banks see the rise of fintechs as an opportunity to enrich and diversify their service offering to ultimately support customer retention. Technology is the tool with the greatest potential to help financial organizations achieve greater operational efficiency and customer empowerment.
7
RegulationsTrend 3
The regulations of the last 10 years have focused on three main areas for investment banking—improving bank liquidity, protecting the process and protecting the client.
The Liquidity Coverage Ratio was covered by Basel III. Investment banks also need to comply with various reporting requirements, like large trade reporting that requires particular IT protocols.
Registration and adherence to reporting requirements for multiple trade repositories like the USA Swap Data Repository (SDR), ESMA/EMIR in Europe and Trade Repositories (TRs), such as the UK’s ICE Trade Repository (ICE VAULT) are another challenge for investment banks.
The regulations have also looked to protect the process through reporting and oversight, to make sure that a single rogue trader cannot take a bank down. However, they also aim to protect and empower employees, with banks now having to provide high quality data for data management capabilities, reporting tools and data governance processes.
Drivers After the banking crisis ROE has fallen by 20% and increasing regulations are creating a very challenging landscape for financial institutions to recover. However, if banks approach regulations in the right way, as an opportunity to improve efficiency and effectiveness, as well as introducing innovation and simplification, they can increase their ROE.
8
Regulations to protect internal processesTrend 3
A key area of regulation in investment banking has been to protect the internal processes of financial institutions. This has meant creating appropriate checks and balances, ensuring the correct level of oversight and monitoring, and protecting and empowering employees.
GDPR Data Protection,Europe
New York State,Department of Financial Services
Federal Financial Institutions Examination Council
Marco Civil da internet,Brazil
9
Trend Operational excellence while simplifying business models
Innovation and sustaining leadership position
Investing in compliance
Tackling sophisticated fraud requires a multi-layered approach
Rise of new technologies will create opportunities to build new efficient processes
To build a competitive differentiator requires banks to develop new capabilities
The key to compliance is creating adequate tools
Growing fraud and cyber threats are pushing organizations to look at adaptive security solutions
Creating new challenges
Across the board, it is currently one of the most challenging times to be in investment banking. Increased competition and falling ROE have hit profits, scandals have affected trust and rapidly changing technology is leading to fraud and changing customers’ expectations.
Challenge
10
Shift toward cloud-based subscription models while retiring legacy processes
Build competitive advantage through innovative offerings – including trading platforms looking at risk, compliance, clearance and settlement
Increase agility through data analytics and real-time management decision-making
Increase efficiency by embracing technology and digital services
A world of new opportunities
While there are many challenges in investment banking, there are also opportunities to grow for the innovative banks who recognize that now is the time to invest in efficiency and effectiveness.
Opportunities
1111
Transformation with HID Global
Secure technology to empower and protect
HID Global helps investment banking institutions by providing the secure technology that can empower employees and help provide better services to clients—or operational excellence.
Adopting new technologies will enable banks to create a competitive advantage while streamlining their multitude of client interfaces. Consumers are used to using online and mobile services with an optimized user experience. They will not accept having a lower level of experience when using investment banking services.
If employees are empowered to deliver what they are meant to deliver, a bank will see a positive impact on the performance of the organization.
Building appropriate tools to comply with regulations, rather than just taking a ‘box ticking’ approach, can actually give a bank a competitive advantage.
The most secure, yet open banks, which protect their customers and enable their employees, while having the right business agility to respond to opportunities, will be the winners in the connected banking world.
12
13
Use cases
HID Approve™ is an easy to use, multi-factor identification and verification solution for mobile devices. It is versatile, easy to set up and allows organizations to empower employees, improve operational efficiency and increase security and convenience when processing trusted transactions. Converged access to data and doors
• Linked access to physical buildings and IT systems.
• Secure approach stops computer log-ins if the badge holder is not in the building.
The “Four eyes rule”
• Fast and seamless approval process.
• Each manager receives a notification in their HID Approve™ application enabling them to approve a stock order quickly and easily.
Secure remote access to data
• Secure access anywhere.
• HID Approve secures VPN access to provide easy and secure access to data.
Get in touch
www.hidglobal.com
Additional resources
If you would like to find out how you can provide your customers with a more secure and convenient banking experience, you can now request a free consultation.
Request consultation
Supporting Business Agility
in a Connected World
(eBook)
Finextra interview:
Digital Identities
with Miguel Braojos
(Video)
Retail Banking -
Navigating the Digital
Banking Revolution
(eBook)
Wealth Management -
Securing Your
Customers’ Future
(eBook)
14
HID Approve™ActivID®Threat Detection
Service
ActivID® Authentication
Platform
Sources
1. Marous J (28 March 2016) Personalization in Banking: From Novelty to Necessity Retrieved from https://thefinancialbrand.com/58063/personalization-in-banking-digital-research-study/
2. Global FinTech Report 2017, Redrawing the lines: FinTech’s growing influence on Financial Services Retrieved from https://www.pwc.com/jg/en/issues/redrawing-the-lines-fintechs-growing-influence-on-the-financial-services-2017.html
15
© 2018 HID Global Corporation/ASSA ABLOY AB. All rights reserved. HID, HID Global, the HID Blue Brick logo, the Chain Design and HID, the HID logo and ActivID are trademarks or registered trademarks of HID Global or its licensor(s)/supplier(s) in the US and other countries and may not be used without permission. All other trademarks, service marks, and product or service names are trademarks or registered trademarks of their respective owners. 2018-02-20-hid-iam-investment-banking-eb-en PLT-03690
North America: +1 512 776 9000 • Toll Free: 1 800 237 7769 Europe, Middle East, Africa: +44 1440 714 850 Asia Pacific: +852 3160 9800 • Latin America: +52 55 5081 1650
An ASSA ABLOY Group brand