Investment Banking

Alignment Increases Revenues

Most investment banking products have a relatively short lifespan: Typically investment ideas are based on a stock, industry sector, current market conditions or a capital raising exercise.

Competition amongst investment banks is fierce. There are only a limited number of prospects and clients and the banks vie with one another to be chosen by specific clients. Many larger clients, who are bombarded with offers operate a preferred supplier type model. In this model, clients set targets in respect to the amount of business they intend to give to each of the banks competing for their business on a periodic basis.

A bank's principal service objectives are therefore:


	To strive to obtain and maintain a superior relationship with its targeted clients in respect to the types of products it offers.

	To ensure that each of its current products are presented to the most appropriate prospects. That such prospects are well disposed to "hearing the product out".

The degree to which a bank is successful in these two objectives will be directly reflected in its revenues and therefore the business processes and tools that it adopts to support it in its efforts are fundamental to business profitability.

Both obtaining and subsequently maintaining a relationship with a client is always a difficult process. There are many factors involved which vary from the "hard" quality of product offered to the "soft" "client doesn't like me/us, period". However what is universal is that if any selling organisation, be it an investment bank or other, consistently demonstrates that it does not understand the needs of the client or frequently pitches products that are not aligned with the client's needs, the client will quickly gain the impression that the organisation wastes their time and hence become ill-disposed to that organisation.

Therefore all have a direct impact on an organisation's revenues.


	obtaining a well defined understanding of what types of products a client is interested,

	keeping that understanding current,

	ensuring that all interactions with a client, be they oral or written, are aligned with that understanding and

	leveraging that understanding to target products

Spyder's core is its product matrix This defines the types of products that an investment bank offers. The product matrix can be configured to suit any business but typically in the global investment banking world it will be "industry sector", "market" and "capitalisation" for equities and "credit quality", "market" for debt products.

Note that the matrix defines types of products not products themselves - this is essential in investment banking because of the temporary nature of specific products (e.g. we are raising capital for a US Technology company or we have a sell recommendation on a British property holdings company).

Spyder's product matrix defines a common frame of reference for everything else in the system. Examples are:


	when associated with a client contact, it is interpreted as the types of products the contact is interested in;

	when associated with a member of staff, it defines what the staff member specializes in;

	when associated with a research document or marketing campaign (e.g. a company roadshow), it defines who the document should be distributed to or the campaign targeted at.

Spyder uses these matrices to assist organisations and their staff to ensure alignment. Examples of functions that leverage the matrix are:


	Generating contact lists, for campaign, call or research distribution reasons: Unlike many customer management systems, lists are generated dynamically. This means that if a client's interests change, lists will automatically adjust preventing misalignment;

	To assist in defining client coverage: who are the best people to support a client or who should we assign a new sales staff to;

	Establishing distribution capability: We are considering the following product, who in our client base may be interested in it; etc.

One of the problems of all client management systems is the issue of keeping track of a large number of clients - over time people change jobs and/or their interests change. Unless the system is kept current, it ceases to provide value in terms of ensuring alignment ("Garbage in/Garbage out").

Spyder directly addresses this problem by analysing every data input - be it, amongst others, the establishment of a new relationship between staff and a client, the transmission of an email or the sending of a research document. Every time it detects misalignment it alerts relevant staff to misalignment. Such misalignments may be genuine data errors but also may be resultant from a change in client interest - an ideal sales opportunity.

Client Prioritization and Staff Coverage Management � Controls Cost

In investment banking, the servicing of clients is resource intensive. The natures of the products involve complex projections and opinions. Whilst these are normally documented, tempted clients will usually need to explore the products verbally. By their nature, staff capable of servicing clients is therefore limited and costly.

It is therefore infeasible to service all clients and prospects to the same level and ultimately banks need to discriminate based on expected return. To facilitate this banks usually define tiers of clients. This in itself can be a complex task particularly where banks cover multiple locales: For example, in the global investment banking community, what may be the top client for the bank's Japanese office may be way down from a US perspective.

To address this issue Spyder provides for the tiering of clients according to multiple tiering schemes. So in the example above there may be a tiering scheme from the Japanese perspective and a different one for the US perspective.

All targeting, research distribution and service provision functionality within Spyder can be controlled according to specific tiering schemes. This allows banks to focus their efforts in respect to the nature of a given product such to maximize the likelihood of reward - thereby minimizing wasted effort and cost.

Client records - keeps staff informed and maintains audit trails

In many situations the interaction between an investment bank and one of its clients is not "person to person" but "team to team". For a premium client a salesman in, say, New York may discuss an investment idea with a contact who then asks that the product expert, say an analyst based in Asia, call her or one of her staff to provide more detail. The salesman in New York would then request the analyst to follow up.

Records of all communications electronic be they telephone, email or document distribution are recorded in Spyder. Communications may be between the bank and the client, internal or a combination thereof.

Spyder provides users with the ability to recall and review all activity in a "bulletin board" like manner, from multiple perspectives. For example, an account manager, salesman or analyst can review all activity with a client firm, a specific subsidiary or contact; conversely line managers can monitor who specific staff members have been servicing.

In a high volume situation, the flow of communications between the bank and a large client can be substantial. To help users keep track of information in which they are particularly interested, Spyder incorporates an alert subsystem, whereby users can subscribe to specific types of event and ask to be alerted if and when such events happen. For example a research analyst based in Asia may request that whenever anyone corresponds with the bank about his latest research idea, he be sent an alert. This helps to keep stakeholders up to date without having to frequently refer back to the system.

Conclusion

Spyder is comprehensive solution that fulfils all aspects of servicing investment banking clients. The system is centred on a unique product matrix that takes into account the fact that investment banking products are short lived and that the alignment of service is the key to maximising revenues.

The system brings transparency to activities taking place inside an investment bank and provides the tools needed to target products and manage resources in as cost effective manner as possible.

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