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Analyzing the demand and supply spectrum of a banking company to boost its growth and stability

A prominent US-based investment banking and financial services company had recently been investing in areas not aligned with customer demands. As a result, it significantly wasted resources and missed opportunities for growth. The company had neglected to prioritize a comprehensive study of the supply and demand analysis, which led to increased customer churn and damaged the bank’s reputation. The company leadership sought the services of Research Nester consultants to provide an in-depth analysis of the supply and demand scenario in the investment banking spectrum.

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An overview:

1

The leading financial institution in the United States offered a comprehensive range of investment banking services.

2

The company specialized in providing consultancy for mergers and acquisitions. It also dealt in advisory services for capital raising, underwriting securities, and facilitating complex financial transactions for corporations, institutional investors, and high-net-worth individuals.

3

The company collaborated with external partners, such as law firms, accounting firms, and other professional service providers, to enhance its service offerings.

4

However, owing to some highly risky investments in illiquid assets landed the company in deep trouble.

5

The negligence while investing, cost the company loss of credibility and apart from a huge debt.

6

It sought the services of Research Nester to provide them with a thorough analysis of the supply-demand spectrum as per the current market trends to place the company’s growth back on track.

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The Story

The investment banking company was founded in New York City in 1977 with a merger of two financial institutions having combined assets of ~USD 2.6 billion at the time of incorporation. After a decade of being a private bank and establishing a strong foothold in the industry, the company went public with an initial public offering (IPO) and got a high price owing to huge demand from investors. The banking company became a multinational and ranked among the top 5 investment banks in the U.S., in 2005 by revenue. The company invested in financing startups but faced heavy criticism for the lack of ethical standards and high-interest rates. In 2007, the company profited heavily owing to the collapse of the mortgage market. The growth did face many ups and downs, till March 2017, when the company invested in highly speculative securities, without adequate risk assessment. Moreover, to meet the requirements, the bank borrowed large sums of money to invest in them, which led to a considerable financial burden.

The misjudged investments along with the company’s high interest rates didn’t go down well with the looming recession. To add to the company’s woes, Russia’s invasion of Ukraine obstructed the bond and equities markets. On the 13th of September, 2022, the U.S. stock market hit its worst and most volatile day, after June 2020. The banking company was in a deep financial mess. The authorities turned to Research Nester consultants to strategize its supply and demand to facilitate the re-strategizing of policies and processes.

Our Solution:

As observed by the RNPL analysts, the banking company had been relying on age-old strategies, which had lost their relevance in the current times. Research Nester analysts offered a customized solution in the form of the Digital Banking Market Analysis Report, which provided an integration of macroeconomic indicators along with the use of advanced technology in the BFSI industry. In addition, RNPL analysts also brought about a thorough change in the company strategies after the in-depth evaluation of the supply-demand scenario. The following changes were suggested by the consultants to the client bank-

  • Having robust internal controls with a disciplined approach to decision-making.
  • Employing trained and experienced investment professionals
  • Restricting concentrated investments in one specific industry as it increases risks owing to economic downturns, regulatory changes, and disruptions in the sector.
  • Observing market trends and global demands before planning an investment.
  • Strategically timing the investments such as buying or selling securities at the precise market junctures.
  • Implementing robust risk management practices and compliance procedures.
  • Strengthening the core competence and engaging in investments that align with their strategic objectives.
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Results

The company started at ~USD 2.6 billion and gradually went on a growth spree for the next 4 decades to reach a valuation of ~USD 676 billion in January 2017. However, owing to miscalculating certain investments, without identifying underlying issues and the ensuing global disruptions, the company landed in huge debts with an increased customer churn. Since the investments performed poorly and faced liquidity issues, the banking company was facing uncertain prospects. The company’s valuation had dropped considerably and it remained at only ~USD 125 billion as of Dec 2020. Finally, the company leadership brought RNPL analysts into its realm to figure out a strong plan of action to stabilize the company’s market standing. With the integration of the measures suggested by the consultants at Research Nester, the company was able to functionalize its assets and formulate its sustainable growth. By the end of 2o22, the company’s finances were back on track, with its overall valuation exceeding ~USD 800 billion.

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Swara Keni

Head- Global Business Development

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