Investment Banks Can’t Solve Sell-Side Workflow Problems By Themselves

Investment Banks Can’t Solve Sell-Side Workflow Problems By Themselves

The investment bank sell-side currently faces many pressing challenges, chief among them the ability to transition to a truly digitized, efficient operational flow that covers all applicable asset classes. In this article let’s take a closer look at this ongoing problem for the sell-side, how investment banks can resolve it, and how doing so will necessitate a long-overdue shift in approach.

All digital transition talk. Limited action

Banks have been discussing digital transformation for years now, but the reality is that there are not many platforms that provide digital asset solutions across the entire asset spectrum. The pressing issue for banks is that now, “digital era business models require digital age systems,” as Accenture details in a report on wealth management software, but banks’ prevalent software vendor selection process continues to base criteria on outdated concepts such as years in business, size, and revenue.

The challenges of developing in-house systems to work alongside legacy systems are well-documented. Fintechs tend to be specialists in their respective areas and they are not beholden to the sort of slower decision-making and execution that can be problematic for traditional financial institutions.

Compared to banks working on their own in-house incumbent systems or off legacy processes, fintechs have an unencumbered path to innovative digital software development that can really facilitate a trading floor transition to a digital era business model for banks’ clients.

Banks’ in-house development doesn’t meet modern sell-side needs

The constant banking chatter revolves around more digitization for greater efficiency, open banking and APIs, and some banks have developed their own platforms to meet digital needs, but they’re still coming up short. The reality is that digital provision of a full asset class spectrum is very niche and up to now, no bank has been able to do it with just one single, digital platform. Sell-side clients continue to have to use multiple platforms, which, of course, is inefficient, more expensive to run, and increases the risk of security vulnerabilities.

Another issue is that as the investment bank sell-side headcount decline trend continues, banks will be more aware of the need to have the right technology stack in place of digital-optimal software that works alongside legacy systems.

A reckoning between old and new is coming

In this new digital age, so much of investment banking is still reliant on the use of old, complex processes. This includes widespread use of spreadsheets, the telephone, email, and ad-hoc add-on software. Another issue is that the dominant trading platforms of the last decades are cost-prohibitive for a lot of asset managers. For those that can afford it, it is nevertheless a considerable expense. And the truth is that even at such a high cost, these products are still limited in what they offer, including a lack of one consolidated view over the entire workflow and pan-asset class access.

This reliance on old processes and software is, of course, completely understandable. There is typically a reticence for institutional change. It’s easy, convenient, and comfortable to “stick with what we know.” There is also the belief that “if it ain’t broke, don’t fix it.” The problem with this kind of thinking is that time is ticking and inefficiencies will become more apparent as time goes on, not to mention the opportunity cost of continuing to forego true digitization. And apart from all this, it is simply inconsistent for investment banks to talk about having a deep interest in digitizing while plainly failing to do so.

The sell-side needs a single sign-on, multi-asset class platform

The sell-side can instantly become so much more efficient with one fast workflow platform that offers a full asset spectrum and requires a single sign-on key. This is what the QUO trading platform offers. QUO works with sell-side legacy systems and offers investment banks a cost-effective, all-asset class cloud-based platform that they can distribute to their institutional clients as a white label product. Assets on QUO include listed assets as well as mutual funds, bonds & structured products, FX, precious metals and cryptocurrency, among others.

The QUO platform provides efficiency gains that bank in-house software development simply hasn’t come close to matching while significantly reducing IT costs. But perhaps more than anything else, it enables investment banks to really take the digital leap they’ve been talking about for so long. Another important and perhaps underestimated issue in the current pandemic climate but probably after too is that people are working from home. This presents a host of workflow and security risks with the current prevalent setup in place. Digitizing with QUO immediately removes such concerns.

QUO’s trading platform represents a plug-in-and-play cloud-based solution that can advance the sell-side’s daily workflow and remove current inefficiencies in one fell swoop. As a result, investment banks are able to deploy a standard-bearer product to their clients that brings real digitization and a host of key performance indicator gains across cost reduction, operational productivity, and automated regulatory compliance.

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