Operating model design for cash equities for one of world's largest banks

One of the world’s largest banks wanted to significantly advance its equity business. This initiative included the development and introduction of a new business model for cash equities, which A.T. Kearney was asked to support.

Challenge
At the outset of the project, cash equities largely followed a "me-too" model with little strategic relevance to the group. The new cash equities business model required an innovative step forward. The vision was for cash equities to be:

an integral part of the Group’s strategic ambition
economically profitable
capable of offering genuinely new propositions

Additionally, the selective and targeted use of capital resources as well as the full integration into the Global Markets business was intended to support external and internal differentiation.

Approach
After agreeing on the global vision and future strategy, the project was split into several phases.

The first phase focused on a comprehensive description of the new business model. An organizational model and corresponding management structure were designed, along with a five-year business plan, which detailed the required investments, profit break-even, and expected pay-backs. Deep industry research and experience along with bank-specific requirements provided the basis for fundamental decisions that had to be taken. The team also developed and coordinated a global road-show to ensure common understanding of the new model.

The next phase produced an implementation plan, which covered processes, structures, systems, and HR. This phase included broader communication, alignment of expectations, and an explanation of roles and responsibilities.

In the final phase, a program office was established to manage the full implementation of the model. Several sub-projects with increasing line responsibility contributed to the effective realization of the model.

Results
Key factors were critical in ensuring success: excellent people, distinctive research products, innovative distribution model, focused trading operation, and invigorated internal pricing mechanisms.