Investment Banking Fights Back

Corporate Finance

The 2008 financial crisis disrupted the banking industry in more ways than one. By hardening of banking regulation, the entry of new fintech players, who not only provide technology but are service providers by themselves, and also the ever-changing digital technologies, the banking game just isn’t what is used to be, as we have documented in a white paper last year.

The large banks, hammered for their own failures and those of the government, went  through endless rounds of mergers, cost cuts and redundancies to pay for fines and ever more compliance. In contrast, a handful of smaller financial institutions, many created by refugees from the big firms, are doing well.

So-called “boutique” investment banks have gained a much larger share of the investment banking and advisory on mergers and acquisitions (M&A) since the financial crisis, and they are also gaining other footholds. The boutique firms  flourishing has again shown that the future of banking is about people and contacts, and not only technology, as was believed as one old institution after another was crushed or absorbed by bigger rivals during the crises.

In the video below, published by Financial Times this morning, The FT’s US banking editor Tom Braithwaite and US financial correspondent Ben McLannahan discuss how long America’s main street banks will struggle under ultra-thin interest margins for their core business while investment banking enjoys a recovery.

Investment Banking Fights Back

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