Over the last five years, investment
banks have dealt with decreased
revenues through cost reductions, while
maintaining, for the most part, reasonably
strong ties to their clients. Over the next
five years, however, this picture could
change dramatically due to a number of
• Deadlines for new regulatory
frameworks, including Dodd-Frank and
Basel III, come into play in the U.S. And
Europe, requiring massive expenditures
and large allocations of management
time and attention.
• Banks’ investors are showing impatience
with low investment banking returns
on equity, at a time when investment
banks need to make large investments
to upgrade or replace entrenched IT
systems and operating models.
• Market changes, including the entry
of specialized players, are sharpening
clients’ understanding and demand for
better services, lower prices, and more
targeted research and content.
• The ‘s-curve’ of digitalization can be
expected to steepen, leaving behind
players who have not leveraged digital
technologies. To date, clients have
not seen much benefit from SMAC
technologies used by their banks,
but client sophistication is increasing
rapidly and the pressure on investment
banks is building.