Investment Banking: trends continuing into 2024
As the year begins, there are plenty of “prediction” lists for what lies ahead. I used to write lists like that myself, but increasingly I found them to be either an act of talking one’s book, or thinly veiled marketing. Instead, I’ve decided to talk about trends that I saw in 2023 that I believe will continue into 2024, and how I believe they will impact the industry. While mine may also sound like thinly veiled marketing, I promise you that they are not: they are simply the result of my position as the CEO of Street Context, and the dimensions of the industry that I am exposed to. I don’t work on trading systems, or back-office tools: I work in the pipes and plumbing of how information flows over email between the sell side, buy side, and corporates.
I wanted to start with Investment Banking: what I’ve seen in 2023, and what I expect to see more of in 2024. I’ll do the same for Sales and Research in other posts (and perhaps Corporate Access and Broker Relations).
**If you want to hear more about these trends, I’m hosting a webinar called “Thoughts on Banking in 2024: prospecting, weekly notes, and building a brand” on January 31 at 11am eastern. You can register here.**
So, what Investment Banking trends did I see in 2023 do I expect to continue in 2024?
1) Prospecting responsibility spreading across all seniorities: the first one would be the continued blurring of the roles and responsibilities across different levels of responsibility. There used to be a relatively clear distribution of responsibilities: analysts and associates would do the work, VPs would coordinate the work, and MDs would manage the relationships and source the opportunities. Increasingly I’m seeing prospecting efforts get pushed down to VP/associate levels, where they are focusing on owning the ‘low touch’ client prospecting, and focusing on some smaller clients, while the senior members continue to own the ‘high touch’ relationships, especially with the high value clients.
These low touch efforts usually involve the team leveraging email as a low touch channel to engage with existing and prospective relationships. The teams are doing this in a few ways.
First, there is the process of getting the contact information. With deal volumes down, I saw a lot of bankers getting proactive about building email lists, targeting key corporates, management teams, and board members. They were using a variety of tools to get the contact information, then adding them to a central distribution list. For many teams, this was the first time they had ever used such tools, and I expect that to continue and become mainstream in 2024.
Once they had the lists in place, one way they engaged was sending a regular piece of content that went out to all existing and prospective targets. This can include news, internal research (if available), insights from the trading desk (if available), and other unique perspectives. This is usually sent by the junior bankers as the senior bankers to build the brand and build name familiarity in the inbox (i.e. “I always get a note from Blair on Friday mornings”). I talked about this evolving in 2023 in a piece called “When industry best practices become table stakes”, and I expect this to truly become table stakes this year.
I expect that 2024 will be the year we see IB leadership teams setting more clear expectations and standardizing best practices across their banking teams:
- Every industry team is expected to have some kind of regular content/thought leadership going out to clients as part of building their franchise (I would expect the standard of excellence to be weekly)
- Management teams start looking at ‘digital touch points’ (i.e. someone actually read something you sent them) in addition to ‘high touch’ interactions as a way of measuring/monitoring client engagement.
Of course, many people reading this might say: “but do corporate clients really want 20 different weekly industry pieces from 20 different bankers?” to which my response would be: look at the other side of the firm to answer that question, where 50+ analysts cover Apple. First, you’re sending the content as much to stay relevant/top of mind as you are to provide insight/value. Second, clients will decide which authors are truly helpful to their process and unsubscribe from the others.
2) Using engagement data to provide unique insights to clients: the other trend that I began seeing implemented more broadly in 2023 that I expect to continue is the process of using engagement data from the markets side of the business in banking pitches/client communications. Now, before you jump to any conclusions about what I mean, let me be more specific: the two work flows I’m seeing are 1) sharing perspective on any highly read research reports (without sharing specifics), and 2) sharing overall analyst engagement/interaction data in a pitchbook (like how firms share stats like traded volume and market share). It’s a proof point.
On the highly engaged research report side, we’re seeing banking teams highlight any reports that generate significantly more readership than normal to corporate clients. It’s a simple conversation: “we normally see readership ranging between 5-10% for our research reports, this morning we saw a massive spike in engagement on our latest report on your new corporate strategy, it would be great to connect and see if we can be helpful in possibly getting you on a NDR or engaging with clients more broadly.”
On the overall analyst engagement side, we’ve seen banking teams start to share more details on the overall/high level engagement of recent reports, and how well respected/well read their analysts are. It adds social proof to the bankers pitch.
3) The rise of collaboration between two groups that interface with corporate clients: investment banking teams, and corporate access teams. These teams are both looking to effectively connect with a corporate: be it the IR team (for corporate access), or the management team/board (for investment banking).
When reaching out to a corporate client for a potential deal, event, NDR, or conference, it can help to have multiple touch points at the corporate, and understand who is the most effective at getting engagement/a response. We’ve seen teams start to request data around “who internally has the highest open rate” with a particular corporate or person at that corporate, then using that person as a channel to connect with the client. It helps to know who is most likely to get a response.
Expect to see these continue in 2024
These are three investment banking trends that we saw pickup in 2023: distribution of prospecting/relationship build across seniorities, using engagement data as a unique insight for corporate clients, and collaboration between corporate access and investment banking to leverage a firm wide view of a relationship. I expect these trends to only continue into 2024 as the firms that have already adopted them scale best practices, and firms that haven’t adopted them yet begin to experiment.
These trends focus on building client relationships, becoming more data driven, and ultimately driving revenue. Good trends for any banking team to focus on as we head into the new year.
If you want to hear more about these trends, I’m hosting a webinar on January 31 at 11am eastern. You can register here.
As always, if you have any questions, don’t hesitate to reach out, and I hope you have a great 2024
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