A Company of THE BOSTON CONSULTING GROUP

Platform rationalization for Capital Market Operations

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A European investment bank was looking to rationalize post-trade technology platforms and simplify Operations processes across Capital Markets and leverage group-wide opportunities.

Problems/Questions

The firm wanted to explore all opportunities available, including internal and external utility options, to reduce cost as well as investment avoidance. The client required an understanding of their competitive positioning with respect to their cost per trade relative to peer firms of similar size and scale.  They wanted to triangulate this analysis with the impact on cost per trade if they were to join a utility, as and when they onboarded other market participants.

How Expand helped

Expand performed detailed analysis of the firm’s entire Operations and Technology cost-per-trade and resource strategy and a review of process complexity and Operations governance. We were able to identify the client's position versus peers in current state, as well as mapped against the future state, enabling the firm to also compare against external utility pricing models currently being offered in the market.

Further, Expand performed an Operations Maturity Assessment. This qualitative assessment involved interviews with heads of Operations and Technology across tier 1, 2 and 3 banks, which looked at cost drivers, strategies and operating models. This produced a scorecard positioning the bank's global and firm-wide platform and process leverage, sourcing strategy, complexity and maturity. It also assessed processing quality, cost, control and capacity, as well as client servicing and importance.

A deep-dive diagnostic exercise identified a different approach to peer firms with regard to cross-asset platform leverage. It also helped identify a significant opportunity to reduce process and technology production. The client had utilized an in-house built platform at significantly higher costs. While this generated cross-product leverage advantages it had significant migration implications if they were to change. Through analysis and relevant stakeholder engagement Expand identified and assessed the impact of current and future state ambitions and the options available to the firm.

Outcome

Expand presented its findings to the firm’s management committee in a series of 1-to-1's and workshop-style debriefs, including a presentation to the head of the Wholesale Operations and Strategy group. Acting on our findings, with the aim of reducing spend in this space, the firm engaged with the relevant internal stakeholders to assess all options, including a review of all process outsourcing opportunities on the table.  A program was set up to reduce costs in the near term, and an RFI process of relevant external providers was set in motion.

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