The vast majority of investment banking clients would recommend their main investment bank to others—yet one-third of those surveyed have changed their bank in the last five years. What were their reasons for changing banks? In our recent Investment Banking Survey, we polled 100 fund managers and corporate executives in the United States and the United Kingdom to find out not only the answer to this question, but also the answers to many of the top issues affecting investment banks today.
You can read much of the most salient findings in our latest in-depth report, but I want to point to a few that are particularly interesting.
Clients are generally satisfied
In broad terms, 33 percent of those surveyed have changed their main investment bank in the last five years, citing more competitive pricing and better product options as the top reasons why. While the degree of switching may appear high, it’s important to note that clients are generally satisfied with their investment banks—37 percent of all respondents said they would definitely recommend their main investment bank, and 59 percent said they probably would.
Research is important, but clients don’t want to pay for it
After price, research is the most important factor influencing clients’ choice of an investment bank—58 percent of fund managers cited this factor. Although many banks have been paring down their research departments over the past few years, research remains a high-visibility, core service. However, it’s a service for which many clients are unwilling to pay a premium.
Clients are willing to pay for risk management though
Risk management services, including advice, analytics, and trading services, are clearly the most valued services to clients—72 percent of fund manager respondents said they are willing to pay a premium for them. Our findings reveal that a distinct hierarchy of valued services seems to be emerging, starting with risk management and working down through a range of enhanced trading services. In spite of all the advances made in trading techniques and algorithms, clients are willing to pay to get important trades completed faster—72 percent of fund manager respondents said they would pay a premium for the ability to rapidly complete trades.
Our client survey indicates that investment banking relationships are surprisingly stable and long lasting, but points to new challenges and opportunities for banks in the years ahead.
Check back on this blog regularly for more detailed analysis of our survey results. To learn more in the meantime, download:
- Investment Banks: A Client’s View—In-Depth Survey Report (PDF; opens in a new window)