Summary of Adapting to Digital Advances

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Technology is changing the financial industry’s competitive environment. In a period of declining revenues, increased regulation and cost challenges, capital markets and investment banks (CMIB) are also losing the information advantage they once held. Digital advances allow nonbank entities access to valuable client and market intelligence to which only CMIB were once privy. This insightful report from Boston Consulting Group professionals provides a good overview of how digital technology affects CMIB, though readers might wish for more real-life examples and fewer buzzwords. Nonetheless, getAbstract recommends it to financial industry executives.

About the Authors

Philippe Morel et al. are professionals in the Boston Consulting Group’s global offices.

 

Summary

Capital markets and investment banks (CMIB) face growing challenges on the digital technology front, as well as revenue, regulatory and cost pressures. Globally, CMIB revenues fell from $246 billion in 2013 to $239 billion in 2014, and 2014’s operating profits were $68 billion, down 28% from 2010. Continuing low interest rates have led to muted market volatility, as well as narrower spreads and net interest margins. Increased capital costs that affect banks’ capacity to hold assets and make markets in less liquid derivatives add to the industry’s problems. Greater regulatory limits...


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