Published on August 28, 2014 by Guest Blogger
In today’s dynamic and interconnected world, where diversity is the norm, global institutions face unprecedented complexity in conducting business. Seemingly traditional and universal challenges of rapidly-evolving technology, intense competition, stringent and ever-changing regulations, and unrelenting pricing and margin pressures tend to impact businesses, and even whole industries, in very specific ways.
Challenges within sectors
The financial crisis of 2008-09 left a mark on the investment banking sector, which saw global deal volumes decline to $2.9tn in 2013 – a mere 60% of the $4.8tn peak recorded in 2007. The average deal size also dropped to $162m from $196m over the same period1. Accelerated by the turmoil among larger banks, smaller boutique and mid-tier investment banks have made substantial advances into established bulge-bracket territory. This in turn has forced bulge brackets to find and deploy new competitive and cost-optimisation strategies to regain their old turf.
Within investment research in particular, research budgets have shrunk due to a decline in trading commissions. The growing popularity of passive investing and high-frequency algorithmic trading have also reduced margins and dampened research demand. It is therefore no surprise that global sell-side research budgets fell from USD 8.2bn in 2007 to just under USD 4.8bn in 20132.
The asset management sector faces its own challenges in the post-crisis world, where costs are escalating faster than revenues, while the profit pools continue to hover below pre-crisis levels. During 2007-13, in dollar terms, net revenues grew a mere 2% versus a margin-squeezing 6% growth in costs3. This in turn has forced firms to invest more time and money into proactive and specialised research to identify below-the-radar opportunities.
Within the non-financial corporate space, companies must rely on virtually real-time intelligence and constant innovation to stay ahead of the competition. Leading, not following, is what differentiates a successful business in today’s fiercely competitive marketplace where pressure on costs is intense. Be it technological advancements, consumer trends/behavior, potential markets, sourcing strategy or peer initiatives, corporates need to remain vigilant and constantly ahead of the curve in order to successfully mitigate competition.
Solutions emanate from a focussed, client-centric approach
All the above challenges require as unique, specialised and client-specific solutions as the problem itself. Every client and challenge is different. It is therefore imperative that a solutions provider thoroughly understands and aligns itself decisively to the end-objective of the specific client. A one-size-fits-all solution, unfortunately, does not always lead to maximisation of client value.
With this in mind, we function as a fully client-centric delivery organisation with our specialist research teams servicing different categories of clients (Investment Banking, Investment Research, Asset Management, Corporates and Consulting firms). Each team understands the real life challenges faced by their client, and is extensively groomed and empowered to deliver high-value customised research and analytics solutions.
For instance, to assist our investment banking clients who face intense competition and need to fast track their competitive pitching processes to win more deals, our specialist teams have standardised existing models, developed central repositories, devised gold/silver/bronze methodologies (options range between comprehensive and rapid yet result-yielding analysis), and even created pitch-book templates with guidelines. All these have helped increase workplace efficiency and reduce turnaround times, while minimising regional and team-based differences and inconsistencies.
Similarly, for asset managers who constantly reel under cost pressure but simultaneously require additional effort to tap new opportunities, our team will undertake all intensive, often repetitive research and monitoring tasks including initial screening, pre-investment diligence, post-investment monitoring, covenant analysis, modeling, back-testing and database design. This provides our clients with a competitive edge as it enables them to focus their time and efforts towards high-value activities, while our offshore research teams do the heavy lifting.
On the other hand, to remain ahead of their peers in today’s constantly evolving marketplace, corporates need to prioritize resources and initiatives and make swift, timely, informed and effective strategic and tactical decisions. Our specialized strategy and procurement research teams help our clients achieve this by developing solutions including customised competitive intelligence databases, innovative frameworks to assess performance, topical newsletters for regular monitoring, supplier scorecards and risk assessment methodologies. These proprietary solutions have helped our corporate clients spot and act on new ground breaking opportunities well before their peers.
We believe that client centricity is not only a marketing tool. We have essentially oriented our entire business around understanding our clients, the challenges they face, and developing customized, efficient, and cost-effective solutions. We believe that innovative, customized strategies can be developed and implemented to overcome challenges and grow client value while also meeting today’s budgetary realities.
1 Global M&A Review–Full Year 2013, Dealogic (Jan 2014)
2 The Economics of Equity Research–Analyse This, The Economist (Sep 2013)
3 Global Asset Management 2014– Steering the Course to Growth, The Boston Consulting Group
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