An Overview of the Challenges Impacting Investment Banking Sectors
Overview: Investment Banking Sectors Today, investment banking sectors are witnessing a new wave of change and transformation. As businesses recover from the global economic crisis, companies operating in the investment banking sectors in the US are still struggling to regain their former levels of profitability. As a result, several major players in the US investment […]
Overview: Investment Banking Sectors
Today, investment banking sectors are witnessing a new wave of change and transformation. As businesses recover from the global economic crisis, companies operating in the investment banking sectors in the US are still struggling to regain their former levels of profitability.
As a result, several major players in the US investment banking sectors have announced their plans to move from traditional underwriting business to other activities including mergers, acquisitions advisory, and fundraising. This change has been largely fueled by recent regulatory changes that have made some banking activities more expensive than the others.
Furthermore, the rising need for sophisticated in-house applications, innovative customer-facing portals, and higher transparency and security across the board mean that companies in the investment banking industry are faced with substantial pressure on all fronts. This blog covers some of the major challenges facing companies in the investment banking industry right now.
Challenges Facing Investment Banking Sectors
Roadblocks in cost reduction efforts
Companies in the BFSI sector have been constantly pursuing strategies to achieve sustainable cost efficiency. However, several factors including declining revenues, excessive costs, and developments in digital and regulatory pressure have increased challenges for investment banking companies in the US, making it incredibly difficult to achieve cost reductions.
Investment banking sectors seeking sustainable cost reductions should strive to strike a balance between optimizing the existing core activities while investing in new engagements.
Enhancing client experience
Customer-centric experiences in B2C business models are shaping client expectations in the B2B realm as well. As a result, players within the investment banking sectors are finding it difficult to meet these changing client demands and expectations.
Businesses in the investment banking sectors can begin by assessing the existing client experience and mapping out the client experience standards that they want to deliver to identify necessary changes that could be made to their delivery channels and feedback and monitoring mechanisms.
Cyber-threats are rising at an unprecedented rate and legacy technology have become a risk factor. They are more prone to unpatched vulnerabilities and create compatibility issues in M&A situations.
Furthermore, there were several mergers and acquisitions in the recent times as banks sought to consolidate their protection under the law. But often the legacy infrastructure acquired by a bank through M&A activity is not up-to-date and features extensive vulnerabilities that create additional fire-fighting challenges for IT teams of companies in the investment banking industry.
Banks are still struggling to retain top talent despite introducing new measures such as faster promotions in a bid to attract employees. One of the prime reasons for this is that young professionals are finding themselves more drawn to alternative sectors such as technology or innovative start-ups.
Moreover, the fact that the lifestyle of an investment banker is typically associated with long hours and tight deadlines is also part of this permanent trend. Banking companies must identify effective ways to attract and retain talent in their organization.