As i was getting down from the train station . I passed by a news paper shop . Looking at the headlines of the news papers , i could feel that we have a storm coming our way. A storm whose reason was being built few years ago. Markets going for a toss. Stock prices falling , Most of the mortgage firms booking heavy losses, banks filing for bankruptcy. It was a time where great economists , CEO’s and corporate giants were supposed to begin thinking strategically and have a outlook of the future which will make the firms on the rise higher grounds. Now i am sure after reading first few lines of this article people would start thinking what the hell am i talking about.
What i am refering to is the so called subprime crisis. I am sure it has now started ringing bells everywhere now. Now one would start thinking that i am going to write about all the big stories as to why these banks failed or how the economy would have been boosted ? How can we increase the GDP.
All i am going to talk here is how to innovate. How can we drive , define and execute innovation in investment banking. Before i actually start putting my views on the same. I would like to iterate the fact that i am giving my views with the best of my knowledge and experience i have . I am more than happy for people to correct me and add their inputs on the same. Now what is the most important parameter that drives this business ??
A simple answer to a simple question : ” Client ” . This is the point from where our innovation thinking caps needs to begin. What we currently see as a state of world economy is a result of assumptions , Greed and taking more risks than what your appetite is.
A classic example of the same is “Goldman Sachs ” as they were able to foresee the crisis which they would face if they dont hedge their positions on time. And that is how even in the midst of crisis Goldman sachs was posting profits . Because the most important aspect that was taken care of was client , share holders and stakeholders interest.
While thinking about innovation (especially in the area of investment banking) we need to take care of certain aspects very carefully :
1. Client : as it is the on who at the end of the day we are going to keep happy by managing his portfolio effectively.
2.Risk: Innovating new dimensions where in how we can measure and manage our risks effectively and minimize the same by diversifying our domains.
3.Technology : How can we do innovation in our technology platforms which will not only help redude our costs but also gives our client a platform for effective connectivity with markets.
4.Being well capitalized: Saving for the rainy days is the idea here. The most important aspect is that any financial institution is supposed to be well capitalized and have enough cash saved for crisis .
Keeping this in mind we need we need to start thinking more on defning innovation and execution of the same.
More to come in my Next Blog … Happy Blogging !!!!!