Why Do Banks Need To Innovate?

Innovation in debt capital markets is fast becoming a top priority in strategic planning.

There is a noticeable increase in momentum and increased organisation over the past few years. Why, though, do investment banks need to innovate?

• Focus on the cost-base

Improving efficiency has been a major factor behind innovation. Can new technologies replace legacy expensive-to-maintain systems? Can innovative digital solutions make operations even more secure without compromising accessibility? Can new ideas open new business opportunities not available before? The answer is yes. But, despite the urgency, a word of caution. To be effective, innovation must sit alongside the strategic goals of the relevant businesses lines, otherwise the value diminishes and becomes rather academic.

• It is about talent retention

Enhancing professional life especially for young talent is what innovation should aspire to. Next generation digital solutions are not just about removing menial and repetitive tasks. They are about providing a platform for creativity, improving strategic thinking and contribution. Ultimately, a motivated workforce will deliver increased workflow. It is this satisfaction that creates loyalty and commitment.

• Critically, it is also about client retention

While on the face of it, investment banks deal with various types of institutions, ultimately, it is a people business. Increasingly, clients are looking for partnership, and added value. Ensuring a seamless experience creates commitment. That could be in the form of data accessibility / availability, new ways of communicating efficiently, removing friction and improving transparency. Again innovation is crucial. Competition is fierce and to stay ahead of the game, differentiation will come through innovative solutions.

• Big Tech is closing in

While Big Tech has not yet penetrated wholesale banking, their entry into financial services has been intensifying. Large client bases, economies of scale, advanced technologies can make them great partners – but sometimes adversaries. Whether collaborating or competing, innovation will position investment banks competitively as they continue to market for new business.

At Finsmart we are continually talking to banks, working to develop innovative digital solutions to their investment banking needs. The cry for next generation innovation is loud – systems that can be easily adopted and delivered seamlessly to clients. Innovation doesn’t just happen. It requires a cultural shift in perception and a commitment to deliver change. Business and technology must work together to deliver competitive advantage across the investment banking spectrum. The time is now.

Sotiris Manderis, Founder and CEO, Finsmart Ltd