While it may still be early in the new year, now’s the time for investment banks to understand and respond to, what we believe, will be the most pressing challenges they’ll face this year. Since 2008, Accenture Capital Markets has been publishing the “Top 10 Challenges for Investment Banks,” and over the years, the list has easily become one of the most anticipated reads among banking executives—for good reason. From restructuring to regulation to harnessing new technologies, banks face unprecedented challenges. Over the next few months, my colleagues and I will dive into many of these challenges and explore the ways in which you can respond. Today, I’m going to kick off the series by looking at, what I feel, will be a significant area for growth in 2014.
New disruptive technologies: What banks are dealing with
Since 2008, investment in financial technology start-ups has grown by 18 percent year over year. The most obvious disruption has been through peer-to-peer lending, which connects buyers and sellers directly and cuts out the middleman. For example, platforms such as Zopa, Funding Circle and CrowdBank remove banks from the process altogether.
The disruption doesn’t end there. The sharing economy is giving way to new entrants like Airbnb, a service that connects tourists with people’s spare rooms. But the sharing economy doesn’t have to be looked at as a negative. Banking can benefit from the surge in start-ups such as OpenGamma, a company that has created an open source risk management platform, and OpenFin that uses technology to help investment banks seamlessly integrate traders’ desktop applications and develop new ones.
There are, however, risks and challenges in dealing with start-ups. Just choosing which one to back can often seem more like a gamble than a strategic decision. So, how should investment banks respond to this challenge? Join me next week when I’ll take a closer look at how banks can seize the opportunities disruptive technologies bring.
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