What’s in Store for Investment Banks Through 2022?

MARKUS BOEHME | March 28, 2019

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Accenture’s latest analysis, our Capital Markets Vision 2022, shows a highly diverse picture of investment bank performance and outlook. Yes, the top four investment banks (all generating above $20bn in revenue and all US domiciled) are creating significant economic profits and thus shareholder value. And yes, profitable niches do exist further down the scale for banks in the $1-5 billion in revenue range. But the rest? The truth is that most of them are failing to generate their cost of capital. And the plot is thickening – with most large players having now reported FY18 results, we are seeing exactly the same pattern!

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Cowen and Company, the broker-dealer business of Cowen Group, Inc. (Nasdaq:COWN), provides industry focused investment banking for growth-oriented companies, domain knowledge-driven research services and a robust sales and trading platform to companies and institutional investor clients. Sectors of focus for the business include healthcare, technology, telecommunications, aerospace and defense/industrials, consumer, energy, metals and mining and transportation...

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How Blockchain is Changing the Banking Industry

Article | June 28, 2021

How Blockchain is Changing Banking and Finance Industry We all have basic knowledge about Cryptocurrency and Blockchain technology, and many peoples understand its complex structures and its valuable benefits for the future. That's why many peoples believed that it's the future of currency exchange. Apart from Cryptocurrencies like Bitcoin, Dogecoin, Etherium, etc., Blockchain has the potential to use the existing technology up to its peak to exchange transaction information and data. With more security and easy to trace back previous transactions benefit, we can say it is the new age of Electronic currency to avoid human errors and frauds. Blockchain technology in Banking Around the many conspiracies and fake theories about Blockchain and Cryptocurrency, many organizations and even countries like Australia, China, Japan, and other developed nations embraced this Blockchain in Banking as a future of seamless exchange of transactions. Apart from that, its decentralized transactions are easy and more secure than we have today. Blockchain could change the current banking technology used by its admins to trace and track the record of every exchange of digital money to lessen the frauds and reduce the time and human efforts. Prominent players of the Bank and Finance Industry like the Bank Of America, JP Morgan Chase, Citi Bank, and other renowned players of finance sectors using Blockchain in banking to improve funds transfer between banking institutions globally and maintain every record of their history of transactions effectively. How Blockchain is helpful in Banking Blockchain technology is a decentralized ledger of transaction which enables the bank to keep track of all the transactions publicly and transparently. It provides a direct connection between the sender and receiver of payments. No intermediary and complete control of the transaction exists in between them. Because of this reason, it provides a way for financial services to work more specifically and without errors to make payments securitization more precisely. This makes Bitcoins that uses Blockchain technology a better option of investment. Benefits of Blockchain in Banking As you continue to read this article, you might have an idea about this new age technology's immense benefits in the finance sector. Let's take a look at how it can be more helpful in the upcoming future. Security: The primary concern of 21st century’s banks is their security. No one knows who will hack their systems and scatter with the money of people who trust the financial system. With Blockchain technology, security issues such as suspicious activities are easily tracked. It is hard to decode the encryption of the Blockchain and takes too much time because the data is not stored on one server but across a huge network of computers. These computers constantly check and verify the records and data. This feature allows a noteworthy use for Blockchain in banking. For a hacker, it is hard to breach many servers. Every transaction that gets recorded in a Blockchain ledger undergoes complicated sets of encryption interconnected with the next block, which results in an unaltered series of coded data "blocks," each dependent on a ledger series. That's why it is one of the best cyber-protection against hacks in this internet world. Fast transaction: If you want to transfer money to someone living in another country, you go to the bank and might have to stand in the long queue for your turn. Once you forward your request, it takes 5 to 10 days to credit the amount in the bank of the recipient. Blockchain can easily reduce such a long time-consuming process. It has the potential to complete the transaction within minutes, not in a day. It saves your valuable time, though. Easy to track and transparency: No doubt that it is a highly transparent and traceable system as compared to the traditional finance system. Every record of amount can be easily tracked with a digital recording system. It reduces the need for time-consuming and costly third-party verification tools. Also, it undoubtedly offers visibility into the transaction history within the banks' operations. Reduce fraud: It can reduce hacking, DDOS attacks, and other scams. Blockchain helps banks to identify their user's IDs and confirm their detail with digital Blockchain ID. It automatically reduces future frauds, which is the biggest concern of the banking system. How bank can use Blockchain: With Blockchain in banking, financial institutions would not need to depend on the network of custodial services and regulatory bodies like SWIFT. They can easily settle transactions directly on a public Blockchain. Here are few benefits of using the new-age technology. Verifying Digital Identity: Banks can't process online transactions without the verification of a person. This process can be done via face-to-face verification, logging in with passwords, or sending OTP on registered mobile numbers. Although, after the application of Blockchain technology, this process becomes more seamless and more secure due to its accurate data reading capability. Smart Contracts: It might be possible to automate the process of transaction, which costs time, added complexity, and delays the transactions using smart contracts. It is a contract with terms and agreements between the buyers and sellers' business. This computerized contract permits the trustworthy transaction completely free from any central authority or external enforcement mechanism. The new way to do business is here. Faster lending: Loan processing takes too much of the user’s valuable time. It can be reduced with Blockchain. This use of the technology is called Blockchain lending. Blockchain lending can give direct benefit to customers by reducing the growing costs. It provides lenders with a competitive offer and helps them do the transaction faster and without any security defect. Blockchain-based Smart Contracts ensure that loan seeker and lender agree viable and fair terms regarding proof of funds and payment planning for future installments. Blockchain technology has lots of advantages and revolutionary benefits to finance and banking institutions. Though, still, people are generally unaware of this technology and fear of adapting to it. This might cost us time to unify our currency and have a better future. Frequently Asked Questions: How is Blockchain used in finance? Blockchain technology can improve finance and lending services by lowering counterparty risk and shortening issuance and settlement periods. It enables: authenticated paperwork and KYC/AML data, reducing risk exposures and facilitating real-time financial document verification. What is an example of Blockchain? Bitcoin is a well-known example of Blockchain in operation. This is a type of digital money (commonly called a cryptocurrency). This electronic form of funds may be transmitted safely from user to user without the need for intermediaries. In other words, there is no requirement for a central bank or administration. Bitcoin isn't the only currency that uses Blockchain technology. Where can Blockchain be used? Blockchain uses extend well beyond cryptocurrencies such as Bitcoin. With its capacity to increase openness and fairness while also reducing businesses' time & expense, the technology influences a wide range of areas, from contract enforcement to making government run more effectively. What software is used for Blockchain? There is multiple software available in the market for Blockchain technology; some of them are: Solidity is one of the most widely utilized programming languages among Blockchain developers. Geth is a Go-based Ethereum node implementation. Mist is the authorized Ethereum wallet created by Ethereum's makers. Is Blockchain the future? Blockchain technology has several uses in a variety of sectors. Blockchain is already being utilized to help with identity management, smart contracts, supply chain analysis, and many other things. The full potential of Blockchain technology is unlikely to be realized. Till then, it is safe to assume that Blockchain is the future of the Fintech industry. { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [{ "@type": "Question", "name": "How is Blockchain used in finance?", "acceptedAnswer": { "@type": "Answer", "text": "Blockchain technology can improve finance and lending services by lowering counterparty risk and shortening issuance and settlement periods. It enables: authenticated paperwork and KYC/AML data, reducing risk exposures and facilitating real-time financial document verification." } },{ "@type": "Question", "name": "What is an example of Blockchain?", "acceptedAnswer": { "@type": "Answer", "text": "Bitcoin is a well-known example of Blockchain in operation. This is a type of digital money (commonly called a cryptocurrency). This electronic form of funds may be transmitted safely from user to user without the need for intermediaries. In other words, there is no requirement for a central bank or administration. Bitcoin isn't the only currency that uses Blockchain technology." } },{ "@type": "Question", "name": "Where can Blockchain be used?", "acceptedAnswer": { "@type": "Answer", "text": "Blockchain uses extend well beyond cryptocurrencies such as Bitcoin. With its capacity to increase openness and fairness while also reducing businesses' time & expense, the technology influences a wide range of areas, from contract enforcement to making government run more effectively." } },{ "@type": "Question", "name": "What software is used for Blockchain?", "acceptedAnswer": { "@type": "Answer", "text": "There is multiple software available in the market for Blockchain technology; some of them are: Solidity is one of the most widely utilized programming languages among Blockchain developers. Geth is a Go-based Ethereum node implementation. Mist is the authorized Ethereum wallet created by Ethereum's makers." } },{ "@type": "Question", "name": "Is Blockchain the future?", "acceptedAnswer": { "@type": "Answer", "text": "Blockchain technology has several uses in a variety of sectors. Blockchain is already being utilized to help with identity management, smart contracts, supply chain analysis, and many other things. The full potential of Blockchain technology is unlikely to be realized. Till then, it is safe to assume that Blockchain is the future of the Fintech industry." } }] }

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2020 Trends in Lending

Article | February 13, 2020

Borrowers' changing expectations fuel new demands for lenders. Influenced by easy, intuitive digital experiences in other parts of their lives, today's borrowers have heightened expectations when applying for and managing loans. For the lending industry, 2020 will be defined by how well it meets those new demands.

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How to Utilize Open Banking Opportunities in 2020

Article | April 27, 2020

Everyone wants to build a creamier, faster, and more efficient financial services journey — which in 2020 is not a point of controversy or friction. Today, customer demand is touching peaks. It is customer demand that forces businesses come out of their silos and collaborate with others to create products and services that are open-source, non-proprietary, and do not lock down users into an ecosystem. The launch of Open Banking is initiated to fundamentally change the way consumers, businesses, and banks pay and get paid, and how they maintain their data. The foundation of a unified Application Programming Interface, or API, across financial institutions, constitutes a foundation in which data can be seamlessly and securely shared right away. While open banking is in the initial stages of its evolution, many assume this trend to expedite and reshape the banking industry in significant ways. Thanks to open banking developments around the world, customers are becoming more informed of the essential value of their information and are increasingly seeking more command over their financial data. Table of Contents •Why is Open Banking Important? •How Does Open Banking Work? •Open banking in United States •The Wave of Change in Payment Arena •Cloud-based Processing Services •Conclusion Why is Open Banking Important? The most valuable asset in the 2020 world is data, and banking data is the finest of the crop, as it facilitates insight into how consumers and businesses are employing money, saving, and acquiring debt. The data has got value and the data that the bank holds and the customers, belongs to the customer and not to the bank, that’s a fundamental realism or premise that the government has is writ large in European legislation. You will be pestered by its called GDPR but fundamentally enshrines the fact that the data belongs to you, the consumer or to the SME, not to the financial institution. And if you as a consumer want to use that information to get access to better products and better services, it’s entirely your right to do so. That’s what open banking is trying to deliver. It holds the promise of making finance more convenient, better tailored and fundamentally smarter. From industry point of view, open banking promises to lower the barriers to entry to financial services and lower the barriers to innovation in financial services. That’s why it is so exciting for many of the fintechs. Open Banking delivers enormous opportunities in 2020, for the fintech ecosystem that goes beyond necessary to invigorate customer relationships and transform businesses. Through ecosystem partners, banks can enter customer journeys earlier than before and create added value to expertly serve enduring customers as well as attract new ones. Customers foresee seamless digital experiences, and platform-based business models, that are a quintessential element of the digital economy. When embracing the opportunities Open Banking brings, banks can leverage the ability, speed, effectiveness, and innovativeness of startups to enhance their product and service offerings. Banks also have access to other banks’ data. By genuinely performing multi-banking services, they can drag competitors’ customers and spread awareness of their brand. How Does Open Banking Work? Let’s put this into three: • What the banks do • How you get registered • What the customer sees The banks have put into places API’s, this means they have made huge technology decisions to expose customer data and access the data from other third parties. For open banking to work, you have to be governed by the OBIE rules. The OBIE is open banking implementation entity and you can either be an AISP or a PISP that sits under the OBIE. The AISP essentially means you are an account information services provider and PISP means you are payment initiation services provider. One means you can aggregate transaction data and customer data, the other means the payments that you can initiate from your third party, from your bank. The third element to this is TSP, a technology service provider. And they basically provide all the rails between the banks and between third parties to make sure that this whole system runs right. From the consumer perspective, at the end, it gives them the ability to share their data with third parties but crucially have the permissioning power to be able to do that. An AISP can condense reams of bank account statement data and pass it to the customer in a single interface, making it ideal for treasurers of multi-banked organizations. Payment service users – whether they are individuals or businesses, can guide their banks or payment service providers to share their bank balance and transaction data with regulated AISPs. To display this information on a user-friendly dashboard, the AISP can convert all this transaction data into the expected format and send it to the customer’s ERP or Treasury Management System. Before the initiation of Open Banking, businesses and consumers were logging into each bank individually to initiate payments, using various workflows and security etiquettes. With the arrival of Open Banking, individuals or businesses are now equipped to mandate their multiple banks or payment service providers to receive payment instructions via their PISP’s app. Learn more: Open banking in the same language Open banking in United States According to Deloitte Insights, The open data revolution is most obvious in Australia, the United Kingdom, and other countries in the European Union. Each has distinct regulations that require banks to share customer data with third-party providers as per customers’ instructions. Other countries, such as Canada, Japan, and Singapore, are also considering similar regulations. Australia, however, has taken it a step further: It has gone beyond the financial services sector, applying an expansive set of rules on consumer data rights and data-sharing to other industries as well. We do not know yet whether this will be a model for other countries, although, in the United Kingdom, similar efforts are underway. While the open banking model in the United States may take a different path, US banks can learn valuable lessons by looking at how it has been implemented in more regulatory-driven environments. Bank leaders may find it particularly helpful to review how different regions set technical and customer experience standards for data-sharing. To date, there are no signs that new open banking regulations are being developed in the United States. Learn more: Open banking model strategy The Wave of Change in Payment Arena One interesting example of the innovation encouraged by Open Banking is HSBC’s Connect Money application. This application enables customers to view all their accounts within single application-even if those accounts are scattered across different banks. According to an article by Accenture "How Open Banking is Catalyzing Payments Change" Connect Money demonstrates one of the most fascinating features of Open Banking. Many Open Banking products and services are subject to “network effects”—they become more valuable as more banks participate. If Connect Money allowed customers to track only HSBC accounts, it might have been somewhat useful. The fact that the app connects across many banks is what makes it powerful. This aspect of Open Banking can also make it easier for new entrants to grow and gain purchase in the market since more access to data means more opportunities to create value for customers. In the payments platform, Open Banking is advantageous to small and medium-sized businesses (SMEs). This is because it facilitates account aggregation, better financial management, easier credit checking of customers, and the unification of lending and accounting applications. With Open Banking, SMEs can receive and make payments using different platforms with better clarity and best momentum. Open Banking payments are validated instantly between consumers and their banks. This means the chargebacks that merchants must pay because of fraud or rejected payments becomes zero. This offers plentiful savings for all merchants. Payments powered by Open Banking also give real-time credit transfers, confirming the payment and empowering merchants to ship the product immediately. Cloud-based Processing Services Open Banking also maintains cloud-based processing services- a compelling alternative for decentralizing processing and encouraging payments innovation. The benefit includes: • More economical costs • More regular compliance maintenance • Advanced enterprise agility • The capacity to flex volumes quickly The new payment option, called IATA Pay, provides customers more extensive selection of payment methods when buying airline tickets. The most popular services that are being worked in 2020 covers Request to Pay and P2P payments services. We can anticipate seeing many more in the following years. Conclusion Open Banking scales to opportunities preferably, then threats. Done perfectly, banks can flourish, encouraging their customer franchises and brand, securing a defined culture, and fostering business through open collaboration with the world beyond financial services. We are witnessing the initial stages of a seismic industry migration that will come into full power over the next five years. The evolution of innovations with the potential to force simplicity and enhance flexibility is turning a once complicated web of financial institutions into centralized tools to maximize value creation. Open Banking scales to opportunities preferably, then threats. Done perfectly, banks can flourish, encouraging their customer franchises and brand, securing a defined culture, and fostering business through open collaboration with the world beyond financial services. Consequently, any bank that needs to stay consistent in 2030 must begin to design their Open Banking strategy immediately.

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Coronavirus is slamming markets. What’s an investor to do?

Article | March 12, 2020

With the markets on Thursday taking their biggest fall since 1987’s Black Monday and the record-setting bull run now a thing of the past, the average investor with a nest egg tied up in a 401(k) might feel powerless to stanch the blood-letting. In many cases, sitting tight amid the mayhem and stock market gyrations is the best approach, though some believe there could be steps an investor can take to limit the damage.

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Spotlight

Cowen and Company

Cowen and Company, the broker-dealer business of Cowen Group, Inc. (Nasdaq:COWN), provides industry focused investment banking for growth-oriented companies, domain knowledge-driven research services and a robust sales and trading platform to companies and institutional investor clients. Sectors of focus for the business include healthcare, technology, telecommunications, aerospace and defense/industrials, consumer, energy, metals and mining and transportation...

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