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  • Stephan Gimpel

The Banking Transformation Paradox

Transforming workflows in capital markets is a complex task

The tech graveyard is littered with failed projects and abandoned tools that couldn’t gain the necessary traction or deliver on overly ambitious promises.

It therefore makes sense for software buyers to vet any new solution in great detail. There’s a seemingly endless number of must-have features and edge scenarios that need to be catered for.

As much as we love those details - and we’re probably guilty ourselves of leading too many conversations into the minutiae of minor features - there’s a risk in that line of inquiry: of missing the bigger picture.

For many banks (and bankers) the natural instinct is to focus on “how to transpose our existing workflows onto a digital platform?”

It makes sense. People are used to certain processes and, in the short term, the easiest way to bring efficiency gains is to replicate those processes in a digitalised workflow.

This is a worthwhile goal that brings many benefits, but it can sometimes feel incremental rather than revolutionary.

Over a longer time horizon, however, as one thing leads to another, those incremental changes accumulate into something that does turn out to be truly transformational vs. the status quo.

Business Transformation is a Journey, not a Destination

A case in point: our vision at Bots is for Debt Capital Markets and Syndicate bankers to have immediate visibility of market opportunities and relative value across all their issuers, all the time. To be able to effortlessly communicate relevant information and market context and then focus on the real prize: differentiated and consistent advice for issuers that leads to more mandates for our clients.

As we gradually execute on that vision it will lead to a change in day-to-day responsibilities for bankers, will open up new ways of covering clients and winning mandates, may gradually lead to different team structures, and so on.

Existing processes (e.g. the dreaded weekly pricing grids) may or may not play a role in that future. The details will emerge and banks themselves have as much scope to shape the direction of travel as tech providers like us.

But to take banks (and more importantly bankers) on that journey, first a lot of time and effort needs to go into delivering a solution that comprehensively addresses all existing workflow requirements. Only once that step is complete can attention shift to next level transformation.

The Banking Transformation Paradox

We might call this the Banking Transformation Paradox: Immediate, revolutionary business transformation is impossible due to institutional lethargy and can only be achieved via a gradual process, but if a process is too gradual it will fail to gain support for not appearing sufficiently transformational.

A good vendor will find the narrow goldilocks zone between those two extremes, but banks can significantly increase their chances of a successful project by recognising that:

i) In an established industry like capital markets, revolutionary digital transformation is always and necessarily built on more gradual digitalisation initiatives. Adoption is (almost) the only thing that matters here and you better make sure your solution meets bankers’ high expectations.

ii) When framing the tech investment decision and business case, it’s wise to think beyond the immediate pain points, features and tasks to be done and also consider the longer term business transformation potential.

Ultimately, you need both: a solution that brings immediate and tangible benefits and that also offers long-term transformation potential.

The difference is that carrying on with the status quo might be a valid option if you only focus on the immediate impact of transposing your existing workflows onto a digital platform, but it most certainly isn’t when you also take long term business transformation goals into account.

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07 de ago. de 2023

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