February 13, 2014
Clients of Investment Banks have Remained Loyal Since the Financial Crisis, but Changing Demands Could Upset the Relationship
Ninety-six Percent of Investment Bank Clients are Satisfied with Their Bank, but a Majority would be willing to Switch for Better Risk Management and Trading Services, Even if They had to Pay a Premium
NEW YORK and LONDON; Feb. 13, 2014 – A recent Accenture (NYSE: ACN) survey of investment bank clients in the US and UK found that 96 percent of clients are generally satisfied and would recommend their bank to others. Despite the turmoil in the industry, only one-third (33 percent) have changed their primary bank since the financial crisis.
“Investment bank clients have remained loyal to their primary banks since the financial crisis,” said Dean Jayson, research author and managing director of Accenture’s Capital Markets Industry Practice for Europe, Africa and Latin America. “But our research shows they are shifting their focus back to basics – looking for simple products and trading services, and increasingly demanding higher quality service and lower fees.”
The survey of 100 corporate and asset/fund managers found that clients would be willing to switch banks if another provider had substantially better offerings in risk management (60 percent) and trading services (43 percent), even if they had to pay a premium. Eighty-one percent of clients said they would pay a premium for risk management services; 65 percent of asset or fund managers and 84 percent of corporate clients would also pay a premium for better trading tools/services.
According to the research, clients claim the top two factors they consider when choosing an investment bank are price (65 percent) and research provided (52 percent), and the most common reasons cited for switching banks are because of more competitive pricing and better quality of products. Nearly one in five clients (19 percent) report noticing a change in their bank’s strategy since 2008 that negatively impacted them, such as increased fees and less research produced.
“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,” continued Jayson. “Digital technologies can be used to simplify their operations, providing banks with a platform to achieve sustainable competitive advantage. Digital capabilities such as analytics, collaboration tools and cloud technology can help banks meet client demands while remaining price competitive, and provide a differentiated experience.”
Clients of investment banks are increasingly incorporating digital technologies into their own businesses. According to the survey, 34 percent of clients are already using big data and analytics to gain insights into their customers’ behaviors, while an additional 41 percent 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.
“Investment banks’ clients are demanding a digital experience from their banks,” added Jonathan Firester, research co-author and a managing director in Accenture’s North America Capital Markets Industry Practice. “This includes access to secure web portals and the ability to trade electronically across various products. Post-crisis, investment banks have focused primarily on modifying their IT systems for regulatory compliance, limiting their development of important client-facing innovations. Without significant transformation in the back office, banks will find it difficult to improve front-office service.”
“Looking ahead, 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 stand to gain significant market share,” concluded Firester.
About the Survey
Accenture conducted 100 interviews of investment bank clients to understand what services they use and value from investment banks. Clients consisted of 50 corporate respondents and 50 asset and fund managers, half based in the UK and half based in the US. The interviews were completed in August 2013.
Accenture is a global management consulting, technology services and outsourcing company, with approximately 281,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.
Accenture Trading Services is a business service within Accenture’s Financial Services operating group that provides consulting, technology and BPO services to help banks increase efficiencies at every stage of the trading lifecycle.
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