BCG: To survive, corporate and investment banks must change

26 March 2020 Consulting.us

If they are to survive, corporate and investment banks (CIBs) must “reinvent” the ways in which they do business, a report from Boston Consulting Group (BCG) says. “Reinventing Corporate and Investment Banks” goes on to outline six key ways in which CIBs can make that transformation.

The report states that many CIBs have not entirely recovered from the global financial crisis spanning 2007-2009. The organizations are suffering under the effects of stiffer regulation and “unfavorable” interest rates – creating issues in the funding of investments. The current coronavirus pandemic has not helped matters. There is, however, hope – by taking the necessary actions, and doing so decisively and quickly, CIBs can ensure they are primed for success.

"Corporate and investment banks can continue with the status quo and wither, or they can commit to reinventing how they operate," Gwenhaël Le Boulay, a BCG senior partner, coauthor of the report, and global leader of the firm’s wholesale banking arm, said. "We recommend the latter course, and not simply because it is the surest way to survival. CIBs that take the right actions can increase top-line revenue by 5% to 10% and productivity by 10% to 20%."   

The CIB Reinvention Journey

First, the report says, CIBs should refocus, forgoing broad portfolios in favor of those which are simpler, more consolidated, and without “noncore product offerings.” CIBs should also ensure that the client takes center-stage, with aligned product and sales functions and redesigned, customer journey-focused processes.  

Additionally, CIBs should attempt to form partnerships that strengthen weak points and fill in gaps in portfolios. Teams within specific CIBs should also change, moving away from individual experts and shifting towards multidisciplinary teams that offer a wide swath of expertise, skills, knowledge, and backgrounds.

Digitalization, too, is an important factor in the survival of CIBs – and an evergreen hot topic in the finance industry. CIBs who embrace the digital age will invariably future-proof themselves. Finally, these organizations must prioritize environmental sustainability. BCG has found that “sustainability-led businesses will contribute roughly $200 billion of the nearly $700 billion in the global wholesale banking revenue pool from 2019 to 2025.”

"Overall, while reinvention may seem a fearsome prospect," Le Boulay said, "our experience shows that for banks willing to commit, the returns can more than make up for the short-term discomfort involved."


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