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How Collaborating with FinTech Industry can transform the way of Investment Banking

Home | How Collaborating with FinTech Industry can transform the way of Investment Banking

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10,october 2019

The banking ecosystem is in a state of revolution. New FinTech entrants are coming into the marketplace regularly, while traditional providers are trying to adjust to the realities of digitalization, advanced technology and increasing consumer demands. Moving from a competitive perspective, traditional financial institutions and finTech firms now understand that collaboration may be the best path to long-term growth.

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The core purpose of investment banks is to flow capital around the real economy, to facilitate global trade and to manage risk. Investment banks were early adopters of digital technology, and the technological advances they made in the front office for trading and analysis debatably outpaced the developments in many other industries. In some cases, however, particularly with the speedy increase of high-frequency trading, and product innovation that went a step too far, the industry debatably became a hostage to its own technological innovation.

The potential of game-changing technologies like blockchain and artificial intelligence (AI), which in the longer term have the potential to address structural costs in the middle and back offices where costs have increased as a result of under-investment during better times. We believe the investment banking sector should look at innovation in much the same way that it would plan a multi-year portfolio.

Innovation collaboration with FinTech industry into the operating structure of investment banks also plays a big part in its long-term efficiency. Some investment banks have decentralized model where individual business units run their own projects and work independently with the external FinTech companies whereas few have adopted a centralized approach whereby they establish a dedicated innovation team operating under a chief innovation officer (CIO) that is distinct from the firm’s business units. Others prefer a Both models have their own merits but we believe that investment banks should embrace a mix model if they are to have the structure and also the elasticity needed to really take advantage of the FinTech revolution.

Collaboration will be key, the relationship between traditional banks and fintech firms has moved from competition to collaboration. The challenge is trying to cultivate an environment where collaboration can flourish as opposed to roasting the beneficiary attributes of either partner. It is not realistic for today’s investment banks to adapt to this model overnight. Ultimately, in today’s FinTech environment everything is seasoned for innovation, so for capital markets firms, now is the time to evolve, or risk facing ongoing challenges to deliver acceptable return on equity for years to come.

After collaboration of these two industries a huge demand of trained peoples has emerged. Think likely Lloyd Business School (LBS), Greater Noida took initiative with IBM a technology giant to train students in the field of Business Analytics, where students are providing training about FinTech using Data Base and Query Language,  Descriptive Analysis, Predictive Modeling, Data Science, Financial Modeling, Structure Equation Modeling, Advanced Data Analytics, Modern Area of Analytics and Managerial Decision Making Tools.

Thus, young executives trained by LBS, Greater Noida will help FinTech firms with advanced analytics tools combined with a broader pool of data sources, to test new risk management and underwriting models, which results in lower costs, expanded prospect pools and higher efficiency.