5 keys to building the investment banking of the future

Investment banking is preparing for a revolution through the incorporation of new technologies such as AI, macro developments that shape the medium-term economic horizon and the relevance of the fight against climate change. Despite the uncertainty, at BBVA CIB we are convinced that the future is promising. On this occasion, José Ramón Vizmanos, member of the Management Committee and Head of Global Client Coverage at CIB, analyses what the sector's main lines of work will be in the coming years.

In recent years, world economies have had to face a lack of knowledge and uncertainty. First, the world was impacted by the crisis resulting from the COVID-19 pandemic, a period in which business revenues and profits were considerably affected due to the change in consumption habits and the general slowdown experienced. Second, the geopolitical situation between Russia and Ukraine led to increased market volatility due to rising inflation, the energy crisis and preexisting global supply problems.

In the investment banking sector, the general market trend follows the prevailing trend since the last quarter of 2022, navigating crises such as the ones affecting the Silicon Valley Bank (SVB) and Credit Suisse in recent months. Faced with an uncertain global scenario, what are the main challenges of investment banking in Spain and globally? What elements will shape investment banking in the coming years?

• Sectoral specialization. The needs of clients are changing and require specialization in key sector issues to be able to anticipate scenarios, with the aim of improving the approach to each problem and providing the best solutions for clients in their respective sectors and markets.

• Digital transformation. The pandemic has been a clear accelerator of trends that were already present in the sector, such as digitalization. The challenge facing the industry is now to adapt the use of technology, with innovative services such as the artificial intelligence, to the processes of investment banking, where more in-depth insights into technological concepts will be essential, together with the recruitment of specifically qualified talent. One of the drivers of better advisory services will be the design of a digital training plan reinforcing the idea that digital tools and innovation applied to work processes can improve the skills and efficiency of bankers.

• A client-centric approach. The needs of clients and businesses are constantly changing. The industry will have to learn to live with the growing digitalization and the experiences of each client. And at the same time, it will have to focus on offering personalized services tailored to clients, regardless of their industry or geography. Cross-border activity will become increasingly relevant.

• Sustainability. The integration of ESG (Environmental, Social and Corporate Governance) criteria together with traditional criteria is key to building tomorrow's investment banking. Banks will need to work harder to offer clients products that help prevent and mitigate climate change and drive the transition to a carbon-neutral economy. For BBVA, which also has a significant presence in emerging countries, biodiversity and natural capital are increasingly important in its relationship with companies. The bank's focus is to strongly support clients and companies that wish to advance their transition to decarbonization and assist them on the path to a greener and more inclusive future. A good example was the creation by BBVA CIB of a revolutionary sustainable loan that focuses on reducing the water footprint, a key priority in the sustainability policies of many companies.

• The best talent: Automation and technology have become key components for the sector. However, the human factor will be more relevant than ever. Humanizing processes to assist its clients and their concerns and having the best talent will enable the sector to understand their needs, interpret them correctly and make their services better focused and more efficient.

Tomorrow's investment banking undoubtedly needs a renewed look, without forgetting the lessons learned. If we take account of these key elements, we can define the future of a very relevant sector for companies and society. The differential value of BBVA CIB's business lies in facing these challenges by prioritizing the combination of the professional quality of its team and the accessibility and knowledge of its clients and the geographies in which it operates. The bank thus gains a wide-ranging view of its clients and its entire value chain. Its robust model of operational excellence also means it can achieve maximum compliance and internal control: optimize capital, seek continuous efficiency improvements and proactively manage the human talent, which is essential to the business.