Thursday, January 25,
2018 08.52AM / EY in conjunction with Innovate Finance Nov 2017
Innovation and The
Driven by a powerful blend of
innovative startups and major technology players, the global FinTech industry
is growing apace, using technology innovation to capture market share from
incumbents in many areas of financial services. While the FinTech entrants’
greatest impacts to date have been at the retail end of the market, the
opportunity for collaboration in capital markets is real and growing; this is
great timing given the challenges faced mean that innovation has become
In this global report that we have
produced in conjunction with Innovate Finance, we shine a light on the
investment banking industry, examining why and how capital markets firms across
the globe can and should collaborate with FinTech organizations to drive their
own evolution in the years to come, and to secure their future role and
position in the fast-evolving financial services ecosystem.
The analysis and recommendations
expressed in this report were produced by EY, and informed and shaped by more
than 40 stakeholder interviews conducted with investment banks and FinTech
firms across the globe. We would like to express our sincere thanks to all the
individuals and organizations, who contributed their valuable time and insights
to help make the production of this report possible.
We hope this report will be used by
capital markets players and FinTech companies to help drive innovation and
collaboration to shape a brighter future. We also hope it will provide a useful
source of insight and analysis to other stakeholders across the FinTech
ecosystem, including policy-makers and regulators.
the investment bank of the future
Imagine you were given the opportunity
— and the luxury — of building the investment bank of the future from scratch.
Wherever and however you start, it’s
unlikely that you would begin from the operating model of the established
capital markets players. And it’s even more certain that you’d end up with
something very different from today’s investment banks.
Instead, you would improve agility and
reduce cost by assembling the organization from various components that now
exist in the marketplace: using collaboration to bring together and integrate a
best-of-breed trading platform with a largely externalized Blockchain-enabled
back office, procured smartly on an “as-a-service” basis.
To service clients, you’d put your
smart brains in the front office, supported by all the AI and analytics they’d
need, again sourced flexibly from specialist third parties. Where your new
infrastructure is best in class, you might consider white labeling it to
Certain corporate clients, for
example, major B2B platforms may also present an opportunity for investment
banks to embed products and services such as cash and liquidity management.
Clearly, today’s investment banks
can’t adapt to this model overnight. But they need to be able to compete with
businesses that can. That’s one reason why — as we pointed out at the start of
this paper: game-changing innovation in investment banking is no longer
optional, but imperative.
However, this new world of capital
markets doesn’t only offer competitive threats, but also new opportunities.
These opportunities need to be approached and addressed in the right way,
methodically researched and smartly activated — all with a recognition that
this type of change is very different from any that investment banks have
undertaken in the past.
As part of our
research, we identified a number of organizations that support innovation in
capital markets. The directory is available in our full report, which includes
130 diverse and active participants in the FinTech ecosystem, spanning not just
startups, but more established players that are pushing the innovation agenda.
And what type of entity will this
change produce? Essentially, an organization with a much thinner spine than
investment banks have today, making extensive use of industry utilities and a
diverse range of partners from across and beyond the FinTech ecosystem.
The investment bank of the
future is taking shape today. For capital markets firms, now is the time to
evolve, or risk facing a struggle to catch up in the years to come.
Executive Summary Here
Full Report Here
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