Ask anyone and they’ll say, “there’s just not enough time in the day”. Never have truer words been spoken than in investment banking, where an organization’s success comes from optimizing various business decisions, based on data that changes with every trade and other activity. Improving the quality of decisions ranging from risk management and collateral optimization, to capital allocation and proactive fraud prevention, can help drive profitability. So, what if an investment bank could receive information far more quickly than they’re receiving it today? This is the third of six themes expected to be driving forces in the coming digital disruption of investment banks.
Information received at a lightening speed means big benefits for banks
Receiving data more quickly is expected to have major implications to two key areas of investment banking: compliance monitoring and collateral optimization. Within compliance functions, digital technologies are enabling a shift from analyzing outlier transactions after the fact, to analyzing all transactions in real-time. To handle large volumes of data, banks will increasingly turn to cloud technology solutions to allow for cost effective and elastic scalability of computing power. The challenge for investment banks will be to mix contextual information with real-time transactional data to identify potential compliance issues beforehand.
Then there are digital disruption’s implications to collateral management, once a secondary consideration for big banks and investment managers. In the wake of market changes and new regulations, however, global, cross-product, agile and near real-time collateral management, measurement and optimization are critically important. These systems must account for ongoing transactions that affect collateral, future settlement activities, changes in the value or quality of collateral, and the contractual agreements governing the types and level of collateral required by each counterparty or lending line. Banks will need digital technology that is integrated with existing infrastructure, and provides a real-time view into collateral across different lines of business, asset classes and geographical regions.
Real-time solutions for real-time results
What’s the first order of business for investment banks wanting to analyze data in real-time? Banks must address ongoing problems with how data is currently managed. Successful banks will need to redesign their data supply lines and processing schedules. It’s time to start thinking in terms of real-time dashboards, minimizing the lag of data and provisioning of business intelligence.
Join me next week when I’ll delve into the fourth theme emerging from digital disruption of investment banks: on-the-go services. Until then, to learn more: