Adopting a Data Driven Advisory Model for Capital Markets – Part 2

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The following is the second installment of a three-part article based on an interview with Stuart Berwick, the CEO and co-founder of UK-based financial technology provider, Singletrack.  Before founding Singletrack, Stuart spent a decade in business and technology leadership roles in the capital markets business units of major global investment banks.  Click here to access Part 1 of this interview.

Mike: So Stuart, why are some of the firms Singletrack has been working with adopting the concept of a data driven advisory? What are they hoping to gain when they move to this new way of operating their businesses?

Stuart: Our clients see a fundamental shift occurring in the industry and are transforming the way they deliver their advisory services. There’s a sense that there’s value within their firm, value within their people, value within their data and intellectual property, and value within their client relationships.  What our platform and the concept of data driven advisory can deliver is an enhancement of the value of these assets: if you have your human resources, your information resources, and your relationship capital working in concert and amplified by workflow tools and AI, this is a much better way for the business to operate.

Our clients are ambitious, whether they’re expanding internationally,  growing their client base within their existing business lines, expanding to new segments such as Wealth or moving into new products and services. They see our technology platform as a key enabler in achieving those objectives and want to lead the transition to data-driven advisory. When you drill down to the next level, what do people really hope to achieve?  Fundamentally, they hope to retain and grow revenues, whether that’s by expanding their client base or by making existing clients more sticky and more valuable. Because of the various industry forces and trends we discussed earlier, our clients are looking for increased flexibility and agility. If we look across to other industries that saw the opportunity to leverage digital technologies to transform their industries – such as the media & entertainment industry and transportation – this is what we are seeing in Capital Markets today. The industry is being reshaped.

Who knows what an increasingly diversified buy side landscape is going to demand next quarter or next year, what type of product or service, what partnership might we need to enter into to deliver something of value? Our clients are looking for the ability to be flexible, agile and responsive to market needs. Employee retention, satisfaction, productivity, and indeed cost management, can be expensive to achieve with inferior technology and inferior data.

Mike: I remember when CRM systems first came out, one of the big sales points was always unlocking the knowledge and experience of your people so that these became an asset of the organization. Clearly, the concept of data driven advisory does the same thing at an enterprise level. It’s not just for your sales people, it’s for everyone in the organization and enables everyone in the organization to leverage the experience and knowledge of every other person in the organization.

Stuart:  I think you’re right about CRM.  This kind of thing has been the promise of CRM for a very long time, arguably since inception. However, as we all know, often the CRM has a habit of being, at best a Rolodex, but at worse a dumping ground of data that nobody ever looks at and everyone just carries on doing what they’re doing anyway. I think it’s fair to say that CRM has never really quite achieved its promise.  Our value at Singletrack is grounded in a different way of thinking about client engagement. We understand the benefit lies in all the other things I’ve talked about on top.  You bring up a very good point, which is also a common theme with our clients:  of course they want a highly empowered institutional salesperson or banker.  However, a capital markets organization working in concert (respectful of all of the data privacy and required information barriers) which adopts a culture of collaborative sharing of information and intelligence is even more valuable. I would argue that some of the greatest inputs which guide next actions within our platform come from outside of those users’ spheres.

Mike: So what are a few of the key roadblocks that banks have faced implementing this kind of data driven advisory model?

Stuart: Going back to the point about CRM a second ago, it’s not something you can easily do incrementally. You can’t necessarily just take a firm’s existing technology assets and integrate them to get the level of synthesis that can really drive commercial benefits. It does require technology that is fit for purpose that can ambiently ingest that data.  These are the unique capabilities that we’ve spent the last 10 years building — our secret sauce.

It is a step change in terms of technology. Fortunately, we’ve got a very clear and proven ROI analysis. It demonstrates that yes, it requires investment, but for that investment there’s a pretty short payback time.

Mike: What you said really sparked a thought. Clearly, because the existing standalone system approach really can’t achieve a true data driven advisory model, what you’re saying is you need to replace your existing systems with a new system that can do all this. And if I were a technologist, or if I were a regular user, I would find that scary from a bunch of different perspectives, whether it’s job security or whether I have to learn a whole new way to conduct my business. I can understand that those two things would be significant roadblocks to implementing something like this.

Stuart:  I think that is true. And for this reason, we built our platform to be modular from the very start. As a result, you can deploy Singletrack just in the markets business, just into sales and research and not the investment bankers, the corporate access team etc. The core workflow tools crossover workflows and functions, modified to support the specific use cases. So there are ways to tackle that problem and establish stepping stones towards the ultimate end game.  This is particularly important today as banks try to create a “one bank” solution – helping their buy side and corporate clients traverse across private and public markets in a compliant manner. This approach speaks to how we operate as a business and how we make it easy for people to take that journey to enterprise adoption.

I think it’s fair to say that it does require some vision, ambition and willingness to partner.  However, this is not something that only a small fraction of firms can achieve because we’ve got firms of all shapes and sizes as customers, some of whom you would consider to be quite conservative. But in reality, there is a journey that clients embark on with us as a partner.

Mike:  When you kind of pitch this concept, how open do you generally find people to the concept of a data driven advisory today? Or do you find that they’re already there from a philosophical standpoint?

Stuart:  That’s an interesting question. We don’t have a lot of push back from prospects on this vision.  Actually, we’ve been trying to figure out what’s changed in recent years.  The COVID pandemic is one factor.  But I think if you roll back two or three years, it was at times difficult to convince people of the data driven advisory model and the value of it.  But that’s the same when you’re taking any new concept to market.

Our thesis is that you’ve got the three intersecting forces we talked about including industry pressures, structural pressures and technology. All of those play a significant part in moving the discussion along.  Specifically, the COVID pandemic has accelerated this thought process because even a capital markets firm with limited technology infrastructure is an information-rich environment. The trading flow is constant and the flow of other types of related information is constant. So in a sense you could, to a certain limited extent, manually achieve what a digital platform can do for you.

However, as a result of COVID, the advantage of a sophisticated technology infrastructure was immediately apparent. Everybody went to working from home. Frankly, it was only technology that kept people working together, that was facilitating that flow of information and guiding people’s actions. There were no water cooler conversations. There was no standing up and shouting at your trader on the trading floor.  We saw that many of our clients were already on that journey.  They benefited from our systems and this really accelerated their openness to adopt even more technology to move forward with a data driven advisory model.

Even now people are still at work in a hybrid fashion, still making tremendous use of Zoom calls or video chats. It seems crazy to say it now, but that was actually quite a rare thing to be able to do at the beginning of the pandemic. It was almost impossible for us to have a video call with a client. Nobody had the hole in their firewall for video conferencing. Now it’s become the norm.

Mike: When you think about hybrid work, that actually makes it more difficult because you go back to the office and you operate in a particular way. You go home and you operate in a different way. And that becomes really difficult, whereas as you go to more of this data driven advisory model, whether you are at work or at home, you can operate in the exact same way.

Stuart:  That is exactly it, Mike.  So a new paradigm has emerged, and the only thing that supports that paradigm is the utilization of a platform such as Singletrack.  Firms that did not have such technology suffered as a result of that during COVID and now they understand the problem. They’ve seen their peers and competitors move ahead as a result of having systems that can leverage their data to drive productive outcomes. And part of the shift has been driven by the fact that these digital interactions have become troves of insights to help identify new opportunities.

We have monthly calls with all our clients where we have heads of sales, heads of research, heads of trading who are now responding to the dashboards we present saying, “Okay, I love that dashboard. But I’d love a dashboard which does this,” or, “I love that algorithm, can you calculate this?” It feels like we’ve passed a critical tipping point of acceptance.

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Mike Mayhew is one of the leading experts on the investment research industry. In addition to founding Integrity Research, Mike is on the board of directors of Investorside Research Association, the non-profit trade association for the independent research industry, and a frequent speaker on research industry trends and developments. Mike has over thirty years of research industry experience. Email: Michael.Mayhew@integrity-research.com

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