Client-facing technology modernization in the investment banking industry

Digital transformation strategies for sell-side firms

Investment banking CIOs and CTOs should be change agents, bringing about an organizational culture shift that perceives client-facing technology as an enabler of rich client experiences—rather than a support function. It’s a holistic approach that understands engaging, elastic, and efficient technology aren’t “nice to have,” but a business imperative.

The imperatives of the modernization journey

Sell-side firms in capital markets are experiencing a huge uptick in the volume and complexity of demands and issues reported by enterprise buy-side clients, such as asset managers, hedge funds, private equity, and corporate treasurers. On top of that, the COVID-19 outbreak has jolted the entire capital markets industry, adding to the headwinds confronted by sell-side services.

That means incumbent sell-side firms, such as broker-dealers and researchers, are under intense pressure to reinvent how they serve enterprise clients today—with a strong emphasis on digitization and customer experience. Otherwise, they risk losing customers to emerging fintech disruptors.

To solve this, sell-side firms must first acknowledge that issues faced by their enterprise customers emanate across the trading life cycle, starting with customer onboarding and transaction processing and extending all the way through settlement and reporting. Investment banks, therefore, must think holistically and long-term about how to modernize their client-facing technology functions to transform the experience of their enterprise clients.

Once sell-side banks identify the short- and long-term business imperatives of the modernization journey, the transformation should be built on the bedrock of a robust, nimble, and scalable architecture to sustain the ever-changing dynamics of capital markets. To guide them through this endeavor, sell-side banks need to establish clear success criteria, such as:

  • Access to a 360° real-time view of client account information
  • Actionable analytics and visualization capabilities
  • Flexible, customer-centric solutions with low cost of operation and enhancement
  • Targeted and relevant research and digital content
  • Scalable microservices-based architecture

Back to top

Client-facing technologies for investment banks

Serving institutional client needs: Are banks waking up?

With the increased focus of user experience on the institutional side, broker-dealers need to urgently improve the experience for their clients (e.g., hedge funds, fund managers, retirement service providers), as well as increase operational efficiency for internal stakeholders (e.g., front office, operations).

To provide such a seamless experience, internal stakeholders, like front office and operations, will need to reduce know your customer (KYC)-related iterations. Building such capabilities has high time to market, and there are currently no market utilities for these services. Hence, broker-dealers need next-generation, product-based technologies that can address such needs. Specifically, these platforms need to provide the following essential capabilities:

Client-facing technologies across the trade life cycle

Enterprise buy-side clients have grown increasingly demanding as they strive to derive the maximum value from their touchpoints with sell-side services. To solve these pain points and provide an exceptional experience, sell-side banks need to look at technology as a key enabler.

When banks think of “client-facing technologies,” they typically think of onboarding as the biggest area of impact. While onboarding is critical and sets the tone for the remainder of the relationship, a consistent digital experience is created only when client-facing technologies are used across all touchpoints throughout the trade life cycle.

Back to top

Reference architecture

Once a strategic road map is in place, broker-dealers need to think about how to reach their target state. The road to standing up a robust and agile client-facing technology landscape may seem daunting at first.

Deloitte has developed an industry-standard solution architecture that banks can leverage to address the previously mentioned customer pain points. Key components of this framework include:

  • Client capabilities
  • Workspace ecosystem
  • API management and integration
  • Content and distribution
  • Sales and client management
  • Client ecosystem integration
  • Data services and data store

A reference architecture that includes the components above can accelerate creation of a state-of-the-art, client-centric, cost-effective, and scalable target ecosystem that balances business priorities, market perspectives, and investment considerations.

Back to top

What next?

The road to building a successful, client-facing technology landscape necessitates the following actions:

  • Leaders need to act as change agents, bringing about a cultural shift within their organizations to perceive client-facing technology as an enabler of rich client experience, not just a support function.
  • Organizations must prioritize modernizing client-facing technology over everything else. To anticipate customer needs and make relevant products and services available beforehand, the adoption of innovative technologies, such as artificial intelligence, robotics, and cloud is required.
  • If there is one economic lesson to take from the COVID-19 crisis, then it is to be bold and be innovative in your technology vision. Organizations that built a scalable and flexible client-facing technology landscape stayed relevant and served as trusted partners for their customers.

Back to top

Fullwidth SCC. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.

Did you find this useful?