The world's investment banks must look to the experiences of the automotive and aircraft manufacturing industries in the battle to remain relevant in a new data-driven digital era says consultancy firm GreySpark Partners.
In a new report, GreySpark contends that the wholesale investment banking model is facing a massive digital upheaval, akin to a full-scale industrial revolution for the sector. The disruption ultimately will cause banks to become more reliable manufacturers of financial products and services, adopting leaner and more efficient business models, says the consultancy.
The research details how banks will acquire the best practices of the automotive or aircraft manufacturing industries - two examples of business sectors that are similarly affected by regulation, direct government intervention via legislation, consistently evolving patterns of stock and services demand and a critical requirement to pool resources in order to innovate.
GreySpark predicts that, as a result of a similar set of forces affecting their business models, banks will reinvent their operating models on three pillars:
- A fully-automated manufacturing plant for the creation, assembly and packaging of financial products and services;
- A multi-channel distribution franchise that provides a consistent user experience for all interactions between a bank and its clients;
- Data managed as an asset across the entire supply chain.
The adoption of this new operating model has significant implications, says the study, as banks' supply and value chains extend beyond the enterprise and incorporate suppliers, partners, market infrastructure and shared utilities.
The report forecasts that the number of joint ventures and strategic alliances between complementary institutions will multiply as banks focus on their core expertise, client franchises and geographies.
The biggest impact will likely fall on the operational workflow and the ability of banks to re-evaluate and manage the data at their disposal, says Saoirse Kennedy, GreySpark senior consultant and report co-author.
“In banks today, data exists as a series of inputs and outputs in systems defined by business processes that feed workflows, specifications and systems," she says. "The next generation of investment banks - digital investment banks - will see data as the foundation on which systems interact. Investment banking must move beyond basic recording and processing of data to allow for real value added that provides customers with more sophisticated services.”