We recently contributed to another Financial Markets Insight document – this one on what we call the Four Pillars of Sales Productivity. This is a business focused article that discusses ways in which investment banks and those on the sell side can improve the productivity of their sales people by giving them the right metrics, at the right time, for them when interacting with their clients. Read the full article here.
The four pillars sales productivity at Global Investment Banks
Since the global financial crisis – and particularly as markets have moved towards greater electronification – many investment banks have reduced the headcounts on their sales desks and directed their technology investments more towards low-touch electronic, as opposed to high-touch, voice-based trading.
However, despite this trend, many markets – particularly rates and fixed income – are still predominantly voice-traded and are likely to remain so in the short to medium term. This raises a question. How can banks leverage the technology investments they may have made in the electronic realm, to improve sales productivity in these voice-traded and high-touch environments?
According to Matt Barrett, Director of Adaptive Consulting, a software development and integration firm that works with a number of global tier 1 & tier 2 investment banks, the answer lies in bringing greater automation to four key areas, what he refers to as the “four pillars of sales productivity”: MIS/analytics; straight-through processing (STP); control; and the monitoring and reporting that enables pro-active outreach to clients.
Pillar one: MIS / Analytics
One of the problems with voice-based markets is that workflow tends to be very ad-hoc, so capturing data in an electronic format to facilitate any kind of MIS is not easy. And, as Matt Barrett explains, in order to achieve meaningful analytics, not only does data need to be captured as early as possible, it also needs to include all client interactions, not just those that have resulted in a trade.
“It is important to capture every negotiation, because that’s what will build up the real intelligence”, he says.
“Today, if a client calls and does a trade, obviously you will manually book that trade onto the system. Generally what isn’t captured is where a client calls, you give him a price and he doesn’t trade or trades away, and the various reasons for that. For example if you were in competition with two other dealers and your price wasn’t good enough. Clients sometimes give you this kind of useful information, so if you want rich MIS and analytics, you need to be able to capture it somehow.”
Sales people in voice-traded markets are notoriously reluctant to enter more than the bare minimum of information onto trading systems, so one of the challenges here is how to ensure such data gets captured. The key is in user interfaces that enable sales people to immediately see the value, according to Barrett.
“If the stick is management telling sales people that they need to enter this data, the carrot on the other side is the sales people seeing the results in rich analytics in real-time, which can really add value”, he says.
“Ideally you want a user interface where, if a negotiation results in a miss, the next time the client calls, the sales person sees that previous miss, even if it’s just 30 seconds or a minute later. Not only that, but they would see that client’s interactions with the bank across the entire desk or across an entire asset class, so that trends can be visualized, understood and acted upon”.
What technology components are necessary for this?
“You need things like real-time multi-protocol messaging and a strong CEP (complex events processing) engine, which bring different benefits but are both necessary. The CEP engine is able to pull streams of data from a number of heterogeneous sources, and monitor all those flows for specific conditions that have been set. All of this analysis takes place in real time, which is incredibly powerful. You need push-based messaging so that you can make your real-time analysis shine. Being able to sending an alert to an individual based on an relevant confluence of events, originating from different sources and occurring in a specific window in time is an incredibly powerful tool, and we find clients get addicted to the functionality once they are exposed to it. The benefit of course is that these tools are arming you with the necessary business intelligence to be able to increase your hit ratios, if used correctly”, says Barrett.