Understanding what your clients really want can be very difficult. A simple feedback survey often leads to a biased outcome as clients flex their response based on the issuer of the survey, or what they believe the issue to be in light of their immediate feeling or state of mind.
Using ethnographic research allows to dig further, beyond the immediate emotional response, to identify the “unsaid” and uncover unmet needs. Applying this methodology, we carried out an independent ‘Voice of the Client’ research, reaching out to European-based asset managers, hedge funds, private equity firms and large corporate treasurers to get their views on the services and products they received from Corporate and Investment Banking (“CIBs”) institutions (1). This, with a view to better understand their relationships with CIBs and gain deep insight of their behaviours, expectations and motivations.
In this blogpost, we share a summary of our key findings. We will then delve into each of the below findings over the coming weeks, providing more insight into the key points that were raised, and share our views and perspectives on the key aspects CIBs should consider to overcome these challenges.
The role of the coverage banker is not working for the people they are servicing – they do not add value, the content is not tailored and the trust to have a true long-term relationship is not there:
- Whilst our interviewees saw the value of being connected to a coverage banker with specialised product or sector expertise, they also mentioned that, “too often, the quality of the relationship is measured by the number of touchpoints or seniority of contact, rather than solely focusing on the value they bring through the quality of insights and perspective provided”.
- In today’s age of Artificial Intelligence, Machine Learning and Big Data, our interviewees are looking for “insights with nuanced and tailored content [based on] specific domain expertise”. However, they also warn that this should not be “confused with repackaging reams of existing information and data in elaborate lengthy pitch decks or research pieces“, nor “sending [them] stuff that they send to the whole market. It’s the tailored insight that makes the difference”. They see more value in concise and crisp insights that are easy to digest.
- Overall, our interviewees’ responses were unanimous with most of them seeing their relationships with CIBs as one-sided and not based on a reciprocal and mutually beneficial relationship. They mentioned the “difficulty of knowing whether Banks provide [them] with specific advice with a view to sell [them] more of their own products, rather than having their [clients’] best interest in mind” – this is what they referred to as the “conflict of interest” concept we will further explore in later blogs. From their perspective, “Banks are more interested in the percentage on the dollar rather than the relationship and client outcomes. [They] would like it to be based on a reciprocal arrangement and mutual success”.
So, how can CIBs, and specifically coverage bankers, get better at listening to what clients truly want and ensuring that the insight they bring them is right?
And, if you are a larger CIBs with both Execution and Advisory sides, what could you do to build trust? Should larger CIBs get more aggressive in selecting the opportunities where they can add value, and decline when they cannot?
How to measure clients’ success in the context of a reciprocal and mutually beneficial relationship (2)? How can they shift successfully from short-termist, ‘every-exchange-counts’ relationship to an outcome-focused customer lifetime value lens (3)?
Whilst coveted, Research appears to be having mixed feedback on value for the customer:
Whereas some of our interviewees saw “Research [as] valuable to [their] Asset Management group”, others mentioned that “Research [had] minimal value for [them]. [They saw] it more as something useful for the banks themselves as smaller brokers [were] already coming with lower prices”. Hence, they were “mostly using internal or 3rd party research”.
How should CIBs repurpose their Research offering to better suit their client portfolio and expectations? Could they - and should they - leverage Third party research papers to get a baseline and spend more time on interpreting it, in the context of specific clients and products/ markets/ sectors?
There is an innovation gap around what is needed in the market versus what is being offered…
According to our interviewees, “Banks don’t innovate to meet clients’ needs. They innovate to meet regulatory requirements, or cut their costs”. Too often, “what Banks think they need to be doing doesn’t add value to [them]”. With that in mind, we asked our interviewees to share with us a few thoughts around ways CIBs could extend their offering to make a difference and help them to address some of their key challenges. Their responses spanned various areas, from a better “access to new markets” - in line with the “rising of the East” scenario mentioned in our Future of Banking blog (4) - through the automation of the current “locate” service for the identification of securities available for borrowing in a short sale scenario, to better coverage of the small to mid-cap deal size market.
How could CIBs bridge that innovation gap? How could they get better at spotting or having sight of new opportunities and capitalise on them, innovating on market offerings based on interest?
All of the above questions demonstrate that there is a real opportunity for CIBs to be engaging with their clients to deepen the understanding of their needs, in particular in this climate, to appropriately prioritise investment, and refine the value of the front office.
This can be achieve through the completion of independent ethnographic researches, as shown by the array of insights gathered from our “Voice of the Client” pilot. These researches can either go “broad”, if the objective is to uncover new areas of opportunities, or “deep”, if the objective is to sharpen existing hypothesis and refine an idea or “prototype” with a view to get a working Proof of Concept launched. The choice is yours.
So, are you ready to engage your clients to find out more about some of the points they raised?
If so, reach out to Audrey Maillot or Dominika Tomek, to discuss how we could apply ethnographic research to help you find out more about your clients’ specific needs and further develop your customer experience.
(1) The term CIB covers Global Markets, Capital Markets (ECM/DCM), Advisory (e.g. Deal Structuring, M&A), Loans and Leveraged Finance.
(2) Refer to our related CLV blog series, “Reimagining the true value of your client relationships key factors to consider”
(3) Refer to our related blog, “Measure client lifetime value to maximise value for the organisation and for the organisation’s clients”
(4) Refer to our related blog, “Future of capital markets potential scenarios and outlook”