Discover how investment banks could use digital technologies to make research profitable again. Learn more: https://www.accenture.com/us-en/insight-investment-bank-challenge-09-research-function?c=fs_cmfy17sldshr_10000009&n=smc_0517

1. 09TOP 10
CHALLENGES

2. CHALLENGE 09 - Top 10 Challenges for Investment Banks
CHALLENGE 09
RETHINKING THE
RESEARCH FUNCTION
TOP 10 CHALLENGES FOR
INVESTMENT BANKS 2017
#IBTOP10
2

3. CHALLENGE 09 - Top 10 Challenges for Investment Banks
RETHINKING THE
RESEARCH FUNCTION
3
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08
09
10 GETTING FIT
AUTOMATION
LOCATION
STRATEGY
DIGITAL
TALENT
CLIENT EXPERIENCE
JOURNEY
TO CLOUD
INNOVATION
RESEARCH
FUNCTION
BLOCKCHAIN
PRUNING FOR GROWTH

4. CHALLENGE 09 - Top 10 Challenges for Investment Banks 4
And changes mandated by the Markets in Financial
Instruments Directive II (MiFID II) will bring the issue
into even sharper focus over the coming year.
SELL-SIDE RESEARCH IS ONE
OF THE BIGGEST CHALLENGES
FACING THE INVESTMENT
BANKING INDUSTRY.

5. CHALLENGE 09 - Top 10 Challenges for Investment Banks 5
RETHINKING THE
RESEARCH FUNCTION
Sell-side research
has become a
commoditized
product with little
differentiation.
Aside from unique insights from
a limited number of specialized
boutique firms, the buy side
doesn’t need or want it.
Nevertheless, it remains an
important way for investment
banks to demonstrate their
expertise and thought
leadership on initial public
offerings (IPOs) and mergers
and acquisitions (M&A).

6. CHALLENGE 09 - Top 10 Challenges for Investment Banks 6
RETHINKING THE
RESEARCH FUNCTION
A business model gone bad
Historically, investment
banks have given away
research for free in the hope
of attracting trading
commissions in the future.
In turn, they used investment
banking fees from initial
public offerings (IPOs) to
support research activity.
BANKS RESEARCH
BANKING
FEES

7. CHALLENGE 09 - Top 10 Challenges for Investment Banks 7
RETHINKING THE
RESEARCH FUNCTION
Electronification is changing the game
The rise of electronic trading
and alternative trading
services has driven equity
trading margins to nearly
zero—and the fixed income,
currencies and commodities
(FICC) market is not far behind.
ELECTRONIC TRADING
ALTERNATIVE TRADING SERVICES

8. CHALLENGE 09 - Top 10 Challenges for Investment Banks 8
RETHINKING THE
RESEARCH FUNCTION
Levelling the playing field
Before NASD Rule 2711, sell-side
analysts often had exclusive access
to material information about
companies—details that were not
readily available to the general public.
Regulation and technology have
changed all that.

9. CHALLENGE 09 - Top 10 Challenges for Investment Banks 9
RETHINKING THE
RESEARCH FUNCTION
Levelling the playing field: Regulation
2000 2012 TODAY 2018
REGULATION FAIR
DISCLOSURE
2020
Prevents companies from
disclosing information to
analysts unless it has been
made publicly available
MiFID II
Separates trading from
research fees, forcing
asset managers to pay
out of pocket or carve
out a research budget
Shrinking research budgets

10. CHALLENGE 09 - Top 10 Challenges for Investment Banks 10
RETHINKING THE
RESEARCH FUNCTION
Levelling the playing field: The Internet
Today, anyone can access virtually anything,
quickly and easily.
TIME + COST TO ACQUIRE INFORMATION
BARRIERS TO ENTRY
COMPETITION FOR SELL-SIDE RESEARCH

11. CHALLENGE 09 - Top 10 Challenges for Investment Banks 11
RETHINKING THE
RESEARCH FUNCTION
The new playing field
Compared to traditional sell-side companies, independent
research providers:
MAY NOT NEED A BROKER-DEALER LICENSE.
TEND TO HAVE LOWER COST STRUCTURES.
CAN USE SUBSCRIPTION SERVICES AND
PAY-PER-REPORT MODELS.

12. CHALLENGE 09 - Top 10 Challenges for Investment Banks 12
RETHINKING THE
RESEARCH FUNCTION
An emerging role for digital tech
As the research landscape evolves,
and new digital technologies and
competitors emerge, investment
banks have an opportunity to
leverage their data in new ways to
earn money managers’ increasingly
limited research budget dollars.

13. CHALLENGE 08 - Top 10 Challenges for Investment Banks
RETHINKING THE
RESEARCH FUNCTION
13
Three ways to make research profitable
01
Think of fintech as a threat and
an opportunity
Niche service providers might have unique
insights that can and will generate alpha—
whether it’s for your firm, themselves or
someone else.

14. CHALLENGE 08 - Top 10 Challenges for Investment Banks
RETHINKING THE
RESEARCH FUNCTION
14
Three ways to make research profitable
02
Get involved in the digital conversation
People are not only consuming more digital information,
they’re also contributing to the conversation.
of investors say that blogs,
social networks and message
boards have a growing impact
on their investment decisions.
86%
Source: www.prnewswire.com/news-releases/brunswick-group-releases-survey-on-investment-community-use-of-digital-and-social-media-188681861.html

15. CHALLENGE 08 - Top 10 Challenges for Investment Banks
RETHINKING THE
RESEARCH FUNCTION
15
Three ways to make research profitable
03
Set your firm apart with digital delivery
A full-service delivery platform that’s mobile, interactive
and regulatory compliant could help understand buy-side
client consumption patterns and increase revenue.

16. CHALLENGE 09 - Top 10 Challenges for Investment Banks 16
RETHINKING THE
RESEARCH FUNCTION
By tapping into new data sources,
including social media, and leveraging
advanced analytics, including sentiment
analysis, firms can reinvigorate the
sell-side research function and create
alpha-generating trading strategies
with a monetary upside.

17. CHALLENGE 09 - Top 10 Challenges for Investment Banks
TAKE THE
NEXT STEP
17
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