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The Future of Corporate Banking: Non-Bank Financial Institutions on the Rise

In a transformative era for corporate and investment banking (CIB), non-bank financial institutions (NBFIs) are predicted to seize a substantial portion of the market. According to a recent report by the Boston Consulting Group (BCG), it is projected that NBFIs will account for 20% of global CIB revenues and 30% of trading volumes by 2030. This is set against a backdrop of an overall growth trajectory for CIB revenues, which is expected to increase between 20% and 35% over the same period, surpassing the trillion-dollar mark. This shift is indicative of broader structural changes within the financial sector.

The Evolving Landscape of Competitors

The emergence of NBFIs stands in stark contrast to the challenges faced by traditional banks. As digital platforms continue to gain traction and geopolitical tensions reshape financial landscapes, legacy institutions find themselves under considerable pressure. These external factors compel banks to adapt or risk diminishing relevance in an increasingly competitive environment.

Julian Hein, a BCG managing director, notes that, “NBFIs are no longer peripheral players—they are central to how capital is being formed, intermediated, and traded.” This statement highlights the necessity for traditional financial institutions to modernize quickly. Failure to adapt could result in diminished relevance and reduced returns.

Harnessing the Power of Technology

Amid this shifting dynamic, technology is expected to play a crucial role. BCG’s analysis indicates that advances in artificial intelligence (AI) could potentially free up between 25% and 40% of capacity for corporate and investment bankers by 2030. The companies leading these transformations are not merely conducting isolated experiments; they are implementing extensive, CEO-supported initiatives grounded in high-value projects.

Particularly within fixed income, currencies, commodities, and equities trading, the benefits of a tech-forward approach are evident. These sectors are likely to thrive as they leverage AI and expand their operations. Conversely, traditional corporate banking may face significant disintermediation unless there is a strategic shift in platform upgrades and coverage models.

Key Findings from the BCG Report

The BCG report identifies several pivotal trends in the evolving landscape:

• - Boutique investment banks are poised to capture 20% of investment banking revenues by 2030.
• - The gap in return-on-tangible-equity (RoTE) between market leaders and laggards could widen to eight percentage points, fueled by scalability and AI-driven efficiencies.
• - Increasing geopolitical fragmentation is leading to a reconfiguration of regulatory frameworks and capital market infrastructures, favoring localized business models.
• - Asia is gaining market share as Europe grapples with various competitive challenges.

A Strategic Approach Moving Forward

In light of these insights, the report encourages CIB leaders to adopt a multi-faceted strategic approach. It suggests allocating 50% of strategic efforts to maximizing potential in core businesses; 25% on scaling high RoTE adjacencies; and another 25% on targeted investments in emerging areas. Top performers are building scalable platforms for delivery, reallocating capital towards fee-driven initiatives, and forming strategic partnerships with fintechs and NBFIs.

Christian Schmid, a managing director and coauthor of the report, asserts, “The industry is at a strategic tipping point. To stay competitive, banks must make bold moves in technology, infrastructure, and client coverage. The middle path is no longer viable.” This underscores the urgency for traditional banks to pivot and embrace innovation to safeguard their position in the marketplace.

Conclusion

As we approach 2030, the corporate and investment banking landscape is set to undergo radical changes. Non-bank financial institutions are emerging as key players in this transformation, challenging traditional banking norms and prompting an urgent re-evaluation of strategies within established banks. The ability to leverage technology and innovation will be paramount for those seeking to thrive in this new era of finance.

For further insights, the complete BCG report can be accessed and reviewed.