Archive for the ‘Capital Markets’ Category

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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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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Can Institutional Equity Sales Be Transformed?

Institutional Equity Sales had been going through an existential crisis since 2003, starting around the time of the Eliot Spitzer rulings. The once noble profession became tainted with suspicions of fraud and conspiracy.  Since then the role has been systematically attacked from several fronts:

– a precipitous drop in commission rates paid by clients leading to drop in margins (and ultimately compensation)

– significant cynicism around the research product they are tasked to sell

– financial crisis at the banks that employ them, which has also led to…

– …instability and irrationality in the markets, making it difficult to provide rational, money-making advice to clients

– drop in the aggregate number of new deals coming to market, which is where a strong distribution platform proves its value [more…]

Within some banks, there have been discussions on whether to exit this area all together, if not strategically pull-back from non-core markets. Salespeople sitting in those seats are nervous, which is not unreasonable given the long-term prospects of the role. Language coming from the executive floors speak of drastic cuts across all Sales & Trading floors, with an emphasis on producers who can’t be easily aligned to a certain threshold of revenue. This is especially concerning to Equity Sales since the commission their clients pay is a bundled payment covering a whole host of services that make it difficult to isolate their contribution.

So is there long-term value in the Equity sales model? I would argue yes, but for the model to have long-term viability, organizations need to think differently about that role and how it can add additional value to clients. They also need to change some key business processes to enhance the impact that salespeople provide across the platform.

Better capture of client interactions

If salespeople had better information about all the interactions that their clients have had across their business and across time, they would be able to create a much more productive relationship. In speaking with many buy-side professionals, it’s clear that one of their top criticisms is lack of continuity and consistency from their counterparties. Through a robust CRM platform that features easy capture of client interactions, capture of research consumption data, and to easily log in notes, the coverage team will easily see client behavior over time and spot opportunities to better the relationship.

There are many CRM vendors in the market and for most people finding the right solution can be overwhelming. When first investigating the options, one is faced with endless possibilities, but also boundless risk. From a quick survey, there are at least 25 enterprise-ready vendors, with about as many upstarts to choose from. Also, CRM implementation projects have a horrid reputation of easily failing. In capital markets businesses, the risk is even higher because of the specialized workflow, compliance, and end-user data needs. Picking the right solution is critical, which I’ll be covered on a future posting.

Institutional Equity salespeople are probably the best positioned to take advantage of these systems and the data that they capture. They have been an integral part of their jobs and most salespeople have faced the challenges of sub-optimal systems.

Integrate with other client activity and client relevant information

IT spending at most broker-dealers has been historically concentrated on the development and optimization of trading technology in order to increase trading profits, to the detriment of the sales side of the business. With the 2008 financial crisis and subsequent reorientation to the client, there has been some shift of investment to Sales IT. There is now a desire to integrate other information into a client profile in order to have a more holistic view of the account to salespeople, including security holdings, fund performance, transaction trends from other asset classes (FX for instance), and client interest-driven information such as stock trends and twitter feeds. The more information that can be integrated into a client’s profile, the better the salesperson can provide guidance to the client. This can be a big differentiator.

The mechanics of integrating this information and rendering it in a useful fashion to salespeople is a complicated proposition, one which falls under the umbrella of the newest management buzz-term “Big Data”. There is a tendency by sales managers to avoid this complexity, but the advantage that we have today is that the cost of gaining a competitively advantageous insight though data has fallen dramatically. Although more discussion on specific strategies and considerations will be addressed in another post, it’s worth taking some time to look at applications like Qlikview, Tableau, and Spotfire to get a flavor of what they can easily do with data. Institutional Salespeople serving as the pivot point of all this information could make them immensely valuable. Of all the people in this role that I’ve spoken to, the one key complaint they all have is that they feel they are constantly chasing information from multiple sources and that they miss a lot of information that can make them more successful. This can be efficiently delivered to them so that they can spend more time with their clients.

Position this role as relationship manager for key accounts, even beyond Equities

The Institutional Equity Sales role is unique relative to other roles in Sales & Trading in that their responsibility goes way beyond executing transactions. Salaried salespeople at many large firms have little involvement with client trades at all. Their core competency is in providing access and insights from across their platforms. Their role and responsibilities should be expanded to provide insight and access across all asset classes. They should be at the center of many of the relationships, especially with clients who are not product specialized, such as macro and event-driven hedge funds.

Buy-side clients constantly say that they want to have salespeople who “think like portfolio managers”.  Institutional Equity Salespeople are the best positioned of anyone in Sales & Trading organizations to evolve into broader experts that can provide clients with innovative solutions. The key is to make sure to provide them with the best tools and information so they can execute the broader mandate.

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How Do We Define ‘Strategy’?

‘Strategy’ is a tricky word because it means many different things to different people. Henry Mintzberg, a management professor and writer, offered that strategy has five different definitions:

Strategy as a Plan: a guide or course of action

Strategy as a Pattern: behavior over time, which I think of as an operating model based on focus and core competencies

Strategy is a Position: defined by product or service offerings and their current and intended position in the market

Strategy is a Perspective: similar to position, but more abstract. It points to the “theory” or grand vision of the business

Strategy as a Ploy: specific actions taken to gain headway in the market and to outmaneuver the competition[more…]

Many consultancies talk about having broad strategic capabilities, but are often unclear about what kind of “strategic” expertise and advice they are providing. In many cases they specialize in one of the above definitions, for example developing strategic plans (“Strategy as a Plan), helping the organization clarify their mission (“Strategy as Perspective”), or may have a specialized expertise, like technology (“Strategy as Ploy”).

We try to bring together all the definitions in our thinking in order to get a holistic understanding of all the issues facing the client and apply innovative solutions. We’ve decomposed the Mintzberg framework to help us get to the heart of the relevant dynamics, which then allows us to leverage our functional expertise to define a clear path forward.

1) First we aim to get clarity around the client’s desired ideal business objectives (“Perspective”)

2) Secondly we rigorously evaluate the client’s condition in the marketplace (“Position”) and the unique strengths, weaknesses and opportunities in their operating model (“Pattern”)

3) Next we define strategies that position the client’s resources most effectively and develop systematic steps to realize the desired objectives (“Plan”)

4) Last, we advise and help direct the execution of new strategies, with the help of our project management and technical expertise (“Ploy”)

We bring to the table what we feel is one of the most comprehensive approaches to not only gaining strategic clarity but to bringing strategies to life.

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Oboe Partners: Our Strategic Framework

We specialize in developing strategies that create sustainable competitive advantages for our clients. We realize that this statement is filled with a lot of management consulting speak and can sound empty or frivolous. But our strategic framework is based on a deep understanding of industry dynamics, analytical rigour, and technical expertise. These are the basis for the development of strategies and executable plans that change decision-making and behavior.

We apply our framework to four kinds of engagements:

Development of client-oriented strategies

  • Evaluate / target new markets and opportunities
  • Create new product distribution strategies
  • Develop strategic plans and set targets for sales and client service teams
  • Professionalize client management / client service functions that enhance sales and relationship impact

Develop understanding of client segmentation and client profitability

  • Identify and define key client segments and sub-segments, and uncover their drivers
  • Develop behavioral client segments that better represent effort and client characteristics
  • Create detailed analysis of client and client segment profitability
  • Activity-based management analytics

Optimize organizational design

  • Recommend optimal team structures aimed at gaining profitable market share globally
  • Create policies and processes to increase workflow efficiency and information sharing

Apply the best technology solutions to increase insights, productivity, and collaboration

  • Big Data
  • CRM and collaboration tools
  • Analytics and MIS
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Oboe Partners: What We Do

OWe established Oboe Partners as a strategy consulting firm with the philosophy that in order to deliver game-changing solutions to our clients, we need to provide not only market context, insight, and advice, but also nose-to-the-grindstone plans to realize the vision.  We have experience working closely with senior management of broker-dealers and asset managers on a variety of assignments that has helped them better operate in a market that is becoming increasingly challenging and competitive. Because of our experience in both the buy-side and sell-side, we understand the full investor value chain which helps us provide unique insights and solutions.

We start with an evaluation of the market space to understand market trends, competitor’s positioning, and most importantly a clear articulation of client needs. Next we do a full, unbiased accounting of our client’s market positioning, strengths, and gaps. Once we fully understand the market and our client, we create innovative recommendations intended to affect strategically significant change. Because of our extensive experience in not just strategy, but in implementation, we create plans for process improvements and platform investments needed to drive change and efficiency.

We’ve applied this discipline to many successful client projects, including entrance into new markets, new product launches, development of new platform capabilities, joint venture and other strategic alliances, and creation of efficiencies using technology and innovative organizational design.

Once these initiatives have been implemented, our engagements often extend to include ongoing measurement and benchmarking of performance. Because we have a strong capability in data and analytics, we help our clients develop analytical tools to help them measure success and deliver real-time information.  We’ve implemented performance dashboards, profitability analysis, and predictive modeling that helps our clients track progress and make changes that will steer their organization across the choppy competitive landscape.


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