Welcome to a new world! Following a phase of brutal consolidation, investment banking will be carried out by a handful of huge commercial banks themselves under direct or indirect control of governments or regulating authorities.
Bank and asset management businesses will be “re-siloed” in ecosystems defined according to risk environment, regulatory requirements and technical constraints. This will improve their agility, make their risk manageable, allow for transparency and simplify
disclosure policies -at least this what we would like to think.
From an IT and risk management perspective there will be focus on
-Electronic trading and clearing. Those derivatives which can be standardised and simplified enough to go to clearing houses will survive. The rest will go. Expect massive downsizing.
-Outsourced valuations of derivatives and complex instruments (they won’t trade but will need portfolio valuations)
-Active systems for cross-asset margining (net collateralized exposure in real-time or near time)
-Active systems for portfolio concentrations (industry, currency, credit, risk factors)
-Next generation risk architecture (re-engineering information flows, desktop. data mining, search, risk dashboard, etc)