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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