Changing demands could upset the loyalty of investment bank clients: Accenture

Nurdianah Md Nur

Clients of investment banks in the US and UK have remained loyal since the financial crisis, according to Accenture's latest survey.

Out of the 100 corporate and asset/fund managers surveyed, only a third (33 percent) of them have changed their banks since the financial crisis. Most of the clients (96 percent) are generally satisfied and would recommend their bank to others too.

However, clients today are increasingly "looking for simple products and trading services, and demanding higher quality service and lower fees," said Dean Jayson, research author and managing director of Accenture's Capital Markets Industry Practice for Europe, Africa and Latin America.

The top two factors that the respondents consider when choosing an investment bank were found to be price (65 percent) and research provided (52 percent).  Respondents also claimed that they would be willing to switch banks if another provider had better offerings in risk management and trading services (43 percent), even if they had to pay a premium.

"Profitability pressures will continue to drive fee increases and impact the research services provided by investment banks until the banks are able to significantly reduce their high fixed costs," said Jayson. He thus advised banks to utilise "digital capabilities such as analytics, collaboration tools and cloud technology to achieve sustainable competitive advantage".

Digital capabilities
Just like other enterprises, investment banks are increasingly incorporating digital technologies in their business. Thirty-four percent of the respondents said that they were already using big data and analytics to gain insights into their customer's behaviours while 41 percent of them are actively watching the trend. Thirty percent of clients are either already using social media or are developing plans to do so and see social media as potentially adding significant value as a business tool.

"As investment banks have focused primarily on modifying their IT systems for regulatory compliance after the financial crisis, they have limited their development of important client-facing innovations," said Jonathan Firester, research co-author and a managing director in Accenture's North America Capital Markets Industry Practice. Banks thus need to "significantly transform the back office to improve front-office service," he added.

Firester predicts that "the next five years could be a perfect storm for banks as they face imminent regulatory deadlines, increasing investor impatience, increased client demands, and the proliferation of digital technologies." Banks making preparations to confront each of these challenges will therefore stand to gain significant market share, he said.