Digital Transformation: Assessing Sellside Digital Maturity 2021

This report examines how, in 2021, the radically different capital markets landscape that commercial and investment banks now operate within means that the sellside of the financial markets industry – specifically, investment banks and non-bank brokerage firms – face four fundamental business challenges:

1. The bifurcation of the investment banking business model between many increasingly large universal banks, operating globally, and other niche specialists;
2. The persistently high-cost base of delivering commercial and investment banking services despite efforts to mitigate costs throughout CIB institutions;
3. A demanding base of buyside firm clients that now dictate terms to their CIB services providers, representing an inversion of the historic power dynamic in the space; and
4. The growing transparency of CIB business practices and costs required by regulators.

In response to these challenges and to future-proof their businesses, CIBs started digitalisation processes in the wake of the financial crisis that were initially focused on front-office technology renewal and process automation.

This report defends the theory that, in the medium-to-long-term, CIBs must go beyond digitalisation and engage in wholesale digital transformation to preserve their position as indispensable intermediaries between buyside firm clients and capital markets.

Their goal should be the conversion into digital investment banks capable of harnessing and leveraging the new capital markets landscape to best serve buyside clients. Achieving the idealised DIB thus requires full digital maturity.