Historically, investment banking has flourished during times of rapid economic expansion and endured challenges during periods of contraction. However, new innovations and approaches are removing the cyclical nature of the business.
Previous models are being replaced by new ones as the competitive marketplace evolves. From big data appellations to cloud computing, technology is changing the way players in the industry operate. Below are some of the trends that are transforming the industry.
Leading investment banks are engaged in creating cutting-edge corporate portals for extending operations and services beyond the existing parameters of customer need and usage. These new portals are designed with flexible architecture, open-source technology and unprecedented customization. These new portals will enable institutions to seamlessly differentiate themselves from the pack.
Leading banks are increasingly leveraging mobile applications as a critical component of their corporate strategies. In turn, their corporate clients are showing more interest in capitalizing on opportunities afforded by the technology. For example, 25 percent of those in the American financial sector have adopted mobile banking. Estimates predict that his number will increase to 40 percent within the coming years.
Instead of cookie-cutter solutions, clients now prefer the ability to tailor the manner in which they view and interact with their banking applications. In response to this market demand, many banks have been delivering enhanced user-interface experiences such as interactive dashboards, widget-based applications and custom portals that easily are customized by clients.
Cloud computing has proved as one of the most disruptive forces in business during recent times. Banks continuing the use of outdated legacy systems will find difficulties in creating and launching new services, for providing access to mobile workforce as well as for accommodating customers and partners that are distant geographically.
Cutting-edge payment-based business models are rapidly being adopted and transforming the industry landscape. Mobile Point of Sale Payment Systems such as Google Wallet and Square, Remote Payment Systems such as Pay Pal as well as B2B Payment Systems, such as Ariba are challenging the dominance of large banking institutions.
The Peer-to Peer (P2P) lending connects borrowers, directly with lenders and is threatening the traditional role of large lenders. In the UK, P2P lending has increased three times during the last three years and is likely to touch the £ billion mark by 2016. In addition, P2P lending is turning to securitization deals, whereby they repackage these loans into bundled securities, thus posing heightened competition.