In parts one and two of my series on the challenges facing investment banks in 2017, I looked at the key areas of simplification and digitization. In this third part, I will conclude with the challenges related to innovation.

Investment banking has always been a very innovative industry. The creation of new financial instruments, the adoption of electronic trading venues and the use of analytics platforms are just a few examples. In the immediate aftermath of the 2008 financial crisis, innovation suffered as banks reacted to immediate cost and compliance pressures. Although these pressures have not abated, investment banks have adapted to a new reality. Many recognize the important role that innovation can play in managing these challenges and driving growth

This year, we identified three challenges related to innovation:

Challenge 8: Getting Innovation Right

Financial technology (fintech) represents both a great potential for disruption and an opportunity for investment banks. In order to make the most of fintech, banking leaders need to develop a holistic framework that is built on a cohesive innovation architecture and one that utilizes meaningful partnerships and incubation programs.

Challenge 9: Rethinking the Research Function

Aside from unique insights provided by a limited number of specialized boutiques, non-differentiated sell-side research is not something the buy side has typically needed or wanted. As the research landscape evolves, and new digital technologies and competitors emerge, investment banks have an opportunity to leverage their data in new ways and earn money managers’ increasingly limited research dollars.

Challenge 10: Using Distributed Ledgers: Blockchain Moves to Early Adoption

Blockchain has the potential to improve processes across an investment bank’s operating model and drive significant cost take out. In order to make the best of this technology, banks need to examine their existing operational systems and determine where blockchain could add the most value in the long run.

The 2017 Top 10 Challenges can be summarized with the watchword “acceleration.” The growth of fintech investments, the rapid scaling of robotic automation and the movement from blockchain pilots to a marketplace built on distributed ledger technology are just a few examples of how this acceleration is playing out, creating challenges and opportunities for the investment banking industry in the year to come.

For further information, get the complete view of the Top 10 Challenges for Investment Banks 2017.