Archive for January, 2013

Four Capabilities for an Effective Client Management Strategy

A successful client management program helps an organization better understand its clients and more effectively service them. Establishing a solid client management discipline entails a multi-year effort of focused leadership, rigorous project management, and well-designed technology. Several key roles and departments need to be involved and they all need to be extremely well connected in order to realize the promise of this process. 

The four key capabilities are a well-articulated and broadly accepted client strategy, diligent service tracking, accurate and timely financial metrics, and robust sales systems.

Capabilities - Client Mgmt

Most if not all sales managers would state that their organizations have all of those capabilities functioning within their organization, but having these functions in place doesn’t necessarily lead to a strong client management practice. We’ve found that the most successful firms have all these areas very well integrated, with all of them functioning toward one clear goal. Whoever leads this initiative has to have a handle on all these areas, if not some level of control across them.

In most instances the head of sales is the person responsible for leading the client management effort, but I’ve seen situations where a senior strategy manager or the head of client management is the main driver and executor of this process. It often depends on how broad-based the strategy is and where the organization thinks its areas of development should be focused.

In my next post, I’ll discuss elements needed to establish a well-articulated client strategy that has broad buy-in and clear expected outcomes.


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Top 5 Technology Priorities for Capital Markets Sales in 2013

Fave_modHere are our top 5 technology priorities we see Capital Markets organizations focusing on this year:

1)  Increased leverage of existing data

Broker-dealers capture an incredible amount of data, partly for compliance purposes, but also from systems that have come on line in the past 5 years aimed at capturing both client and sales interactions. Firms are sitting on immense repositories of trading and client information but have not had the systems or resources to mine that data to create a competitive advantage. New technologies have dramatically driven the cost down of storing, retrieving, aggregating, and analyzing the data. We’ll see firms combining phone, messaging, and email data with transaction and market data to develop new insights about customer and market trends.[more…]


2)  Mobile integration

As more people become dependent on their mobile devices to manage their personal lives, they are going to look to manage their work life in the same way. This means a higher degree of mobile integration of their work applications. There are many difficult and unresolved technical and compliance questions, but we feel that firms that have invested in mobile and BYOD (Bring Your Own Device) infrastructure over the past two years will see significant realization of productivity this year.


3)  Migration to the Cloud

Security has long been an issue with financial firms (especially in securities firms) when talking about hosting sensitive internal data on the Cloud. We believe that new security advancements in Cloud computing will allay most of those fears and will compel many firms to revisit this option since it provides advantages in cost, stability, and accessibility.  As mentioned in the last point, mobile will become a big priority for productivity, but would be severely constrained if data has to sit in slow and inaccessible local servers.


4)  Incorporation of social media

Social data, meaning data from social internet sites such as Twitter and LinkedIn, will be made more readily available, if not to all sales and trading staff, then at least to a critical beta group. LinkedIn data is being made available for integration with in-house CRM systems so that internal contact data can also feature LinkedIn profile and company information. Most CRM systems worth their salt have recently built LinkedIn data integration capabilities. Many firms still haven’t seen the value of Twitter, with most firms blocking the application entirely. But a few upstart Twitter analytics firms, with access to Twitter’s data fire-hose and some serious data analytics engines, are providing extremely useful insights on market and client trends. The most notable is Dataminr, which focuses primarily on financial markets.


5)  Mining of unstructured data

We now have technology that can systematically ferret out and analyze information from unstructured data sources, such as text in emails, client call reports, research reports, and even phone conversations. We admit that this will be more of a 2014 focus for most firms, but many will start to look into it this year since it can provide a significant new stream of data to analyze.

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Top 5 Strategic Priorities for Capital Markets Sales in 2013

Park_modAs the New Year commences, we outline our top 5 strategic priorities that we see Capital Markets Sales organizations focusing on this year:

1)  Client strategy becoming the top priority across Capital Markets

As banks and brokers begin to grasp the impact of Dodd-Frank on their trading books and profits, the importance of a well-articulated client strategy will crystalize. Sales organizations will be tasked with driving increases in revenues (or closing of revenue gaps created by regulation), which will be highly dependent on their ability to service clients most effectively, best predict client’s needs, and efficiently allocate resources and talent to satisfy client demands.[more…]


2)  Focus on wallet share and profitability rather than production

Top-line revenue has been the most important metric to measure importance and progress with a given account. This year we will see a large shift in focus by all major players on the capture of wallet share and maximization of account profitability rather than top-line contribution. This shift is intended to focus firm resources on the biggest bang for the buck. Divisional performance and individual compensation will be driven by these new metrics. We will see large investment in technology to better measure and report on these numbers. Firms not adopting these measurements will see a loss in share and profits across the board.


3)  Finding opportunity in the long tail

Competition for wallet share of the largest clients will increase even more than in the past as most players become smarter on how they deal with them. We see a refocus on the opportunity found within the “middle market” tail of mid-sized and small accounts. Many of these accounts are actually very profitable to service and are poised to grow as the dynamics of the buy-side industry change. Banks and brokers that can figure this segment out will benefit with increased profitability and better prospects for future growth.


4)  Increased focus on cross-selling across asset classes

Firms with multi-asset class capabilities will try to realize the benefits of a well-structured cross-selling effort. Buy-side firms are looking to gather alpha in any place they can, and sell-side firms have the intellectual capital and resources to provide that but are often too unwieldy and siloed to give any significant advantage or direction to their clients. With the right incentive structure and systems in place, a salesperson on any given desk should be able to give valuable direction that can translate into incremental revenue and share across the platform. We will also see mid-sized banks and brokerages attempt to develop capabilities in new asset classes, and then try to increase overall penetration with clients. There should be enough talent on the Street from recent staff reductions at large banks to build up these capabilities.


5)  Industry partnerships in complementary areas

Given the uncertainties in banking industry globally, there is little appetite for significant merger or acquisition activity. This leaves the option for opportunistic partnerships in markets that can be mutually beneficial to certain players. A firm with strong capabilities in emerging markets, but lacks penetration in the US can partner with US centric firm to provide clients a more complete offering. We’ll see an increase in joint ventures across the board this year.

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Big Data: What’s the Hadoopla all about?

Big DataThe latest buzzword dominating business headlines today is “Big Data”. What was once known in past incarnations as Data Processing, shifted to become Data Mining, then transforming into Business Intelligence, and now has finally adopted the name “Big Data”. It’s still unclear to many business managers what Big Data is. A lot of technology managers have a hard time explaining it. All this makes it hard to make the value it promises tangible enough to invest in. The core of the problem is that “Big Data” isn’t just one thing. It’s an umbrella category for a series of technologies and methodologies that have made dramatic strides in innovation and business application, with a core goal of leveraging data to create dramatic and sustainable competitive advantages.[more…]

I’ll set a baseline definition for each of the four main categories implied by the term “Big Data”: data sourcing; data storage and staging; analytics and insight creation; new business models. This should give a non-technology manager a basic understanding that could get them through a cocktail party.

Data Sourcing

This is simply identifying, or in some cases creating, sources of information that can provide, alone or integrated with other data, new insights for a business. New technologies have emerged that make it much easier to source information that wasn’t easy to capture before, like customer interactions. Other technologies have created new fountains of data that businesses can tap into to gain additional insights, such as Twitter and GPS location information. The gap between what the optimal or “dream” data universe has to look like to create a sustainable competitive advantage versus what is currently available to a business is quickly closing. Managers should think big about what information would be game-changers and challenge their technology groups to find it and capture it. In previous posts I’ve recommend a book by Douglas Hubbard called How to Measure Anything which provides a fantastic framework.

Data Storage & Staging

A radical drop in the cost of storage has made the warehousing of large amounts of data a manageable economic proposition for most firms. We now talk about capturing and storing terabytes and petabytes of information. More importantly, new technologies, like the much hyped Hadoop framework, can pull data from clusters of data servers in an extremely efficient manner which solves two major headaches: 1) stored data can be quickly extracted for analysis, in some cases near real-time, and 2) fragmented data from multiple silos can be combined and analyzed together.  Firms like Cloudera and MapR provide cloud software and services that can help in developing the right structure. 

This new kind of infrastructure allows data to reside in large distributed networks that provide speed, perpetual access, and data redundancy, and has been labeled Cloud computing. Cloud services are offered by a growing group of firms that provide simple and scalable services. Two of the best known are Amazon and Rackspace.

Analytics & Insight Creation

What analytics you want to create largely depends on what data you have and what form it takes. An important feature of “Big Data” analytics is its flexibility with both structured and unstructured data. Traditional structured data is organized within set fields and in relational databases, while unstructured and semi-structured data require additional enrichment and organization to allow them to be useful for analysis and insight generation. An experienced analyst, for example, can create algorithms that ferret out useful items found in written text documents, then match them to other relevant data.

There are a variety of analytical tools in the market, most of them very rich with features. The level of sophistication of the tools, and subsequent modeling, used in any analysis depends on the complexity and volume of the data, as well as the kind of insights that are being sought. A common mistake is to procure overly complicated tools and build overly complicated models that don’t improve business outcomes. Managers need to define very clearly up front what kinds of results they want to get.

SAS and R are the standard-bearers for statistical analysis, and the go-to tools when you are looking to find correlations and testing causation in your data. The biggest bang, though, comes from an ability to create visualizations of your analysis, making it easier to digest, remember, communicate, and inspire action. A variety of vendors, such as Spotfire, Tableau, and QlikView, provide visually-driven Business Intelligence software that can be used to create intuitive analysis and dashboards used by managers or salespeople for decision making.

New Business Models

Putting a “Big Data” infrastructure in place at a firm won’t automatically ensure a return on investment. Businesses need to change in order to incorporate Big Data insights into their DNA. In some instances, completely new businesses models have emerged, like in the cases of Amazon and Netflix. In existing businesses though, a new data discipline needs to be put in place. It starts with management articulating clear goals and measures of success, followed by planning and execution of a Big Data plan that is in-line with company culture and talent, and lastly developing incentives and training that promote data reliance.


Despite the hype, Big Data really isn’t anything new. There’s been a renewed interest in the four principal areas that comprise it due to new innovations and impressive results of businesses that have fully adopted it. There is a tremendous opportunity to realize value using these tools, so it’s important to have a strong working knowledge of what they are and have it in the back of your mind as you think about your business strategy.

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Disparity in Technology Investment between Sales and Trading

HighTechnology budgets at Institutional Broker-Dealers have in general been disproportionately focused on the trading side of the business, leaving the sales side with limited technology innovation. This is not to say that much of the technology built doesn’t benefit salespeople. Much of it facilitate the sales workflow, especially when dealing with order tracking, capital, and market data. What has been missing is a meaningful investment in tools that do three things: 1) provide more (and more relevant) client information to salespeople in a consolidated and timely manner; 2) analytic solutions that serve up algorithmically driven insights that can help salespeople better engage clients and provide differentiated service; 3) new ways for salespeople to interact with information and systems, like alerts and mobile solutions.

Consolidated Client Information

Client information at most banks is comprised usually of core client data (addresses, key contacts), internal control data, trade and production data, plus any client interaction data (meetings, calls) that the firm happens to captures. For the later, some firms are disciplined at capturing every interaction, but most only capture parts. There is, however, a great amount of information that can be very useful for salespeople in their dealings with clients. Many salespeople actually spend a significant amount of their time digging through varied internal systems, Bloomberg, Reuters, and the web to find pieces of relevant data that they can use, much of which could be served up in a more consolidated and automated fashion, commingled with basic client information. When looking at a client in their client system or CRM, they could also have client fund holdings and performance data, trends in names or sectors clients are interested in, research readership, and social media data (such as Twitter feeds). For organizations offering multiple asset classes, providing a salesperson relevant activity data from other asset classes can be invaluable, such as providing Equity salespeople data on a client’s corporate bond trading activity.

Analytic Solutions

Sales & Trading organizations have been investing hundreds of millions of dollars in algorithmic analytic and trading technologies. Some of that discipline (and investment capital) should be leveraged to provide more timely and automated insights to salespeople. Specific types of movements in securities or sectors that might interest specific clients, movements in other areas that might be correlated to client interests, and general behavior of different client segments of which a particular salesperson’s clients might fall into. This would give salespeople lot of processed information that provides differentiated insights to offer clients or help better manage a book of clients.

New Ways to Interact with Client Information

A good institutional salesperson in any asset class is skilled at collecting and synthesizing information quickly, either to provide relevant information to their clients or to help them strategically manage their client coverage. Creating efficient ways of getting pertinent information quickly is the key to success. Development of intelligent alerts is one way to serve up relevant activity, analysis and trends. They can simply be an alert that someone else in another product group called on that same client. The more robust the analytical solutions (from point 2) that are in place, the smarter and more relevant the alerts could be, such as a spike in trading for given client segments after a particular event or research published. With current mobile technology, these types of alerts and analysis can be delivered and actioned upon very quickly.

There is a big opportunity for Sales & Trading organizations to greatly differentiate themselves if the right level of investment is made on the Sales side of the organization. This is going to become more critical as innovation in trading technology becomes less and less differentiated across competitors and new regulations constrains the way trading revenue is achieved.

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A New Year: An Opportunity to Refocus Our Work

Yesterday was the first day of the year, where many of us were either soothing our retched hangovers or waking up early to get a jumpstart on our new resolutions. Today, though, is the first work day of the year. Our heads are surely charged up with memories of our holidays or preoccupied with fiscal cliff politics and general health of our economy. I think today is a great opportunity to refocus ourselves on all the good work that enhances our human collective: creativity, innovation, collaboration, and open exchange.

These virtues are the only things that are going to move our global society forward, and the best thing is that we can all participate by integrating these into our daily work life, starting today.

We wish you a prosperous 2013, filled with success, health, and happiness.

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