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MiFID II is redefining ‘CRM’ for institutional brokers and investment banks


The MiFID II unbundling regulations have upturned the business model for sell-side research, driving firms towards a fundamental review of how all aspects of their customer relationships are managed, and how content and services are delivered and monetised.

The MiFID II unbundling regulations have upturned the business model for sell-side research, driving firms towards a fundamental review of how all aspects of their customer relationships are managed, and how content and services are delivered and monetised.

Prior to MiFID II, keeping up to date with individual asset manager’s requirements, delivering appropriate content in a timely manner, and keeping a record of client consumption was something to aspire to and considered good business practice. From now on, this is the baseline for maintaining relationships with any asset management firm serving European end clients.


Whether asset managers establish Research Payment Accounts or cover the cost of research through their own P & L,  the price and value of content and corporate access services will be subject to intense scrutiny. This major shift in client expectations and requirements, together with the growth of research and roadshow aggregators, plus markets for unbundled research and new forms of interaction reporting venue, call for new CRM processes to ensure that products and services are delivered, and consumption reported, in a MiFID II compatible manner. The onus is on the sell-side to review the process of service provision, and provide more detailed data in order that the buy-side can accurately and consistently measure, value and report their consumption.

Sell-side firms can position themselves to monetise research and enable asset managers to justify research spending by recording and reporting research and service consumption at a very granular level. This requires systems that can capture and provide the necessary data, tracking all aspects of relevant buy-side interaction and service provision, whether it’s email or phone communications, meetings, roadshows, research distribution, or consumption monitoring across multiple channels.


For maximum transparency comprehensive records of client interactions should be consolidated in one place in a readily searchable format, with the facilities to track, quantify, analyse and report on the services provided. The aim is to organise, execute and measure all workflows and consumption, while providing the metrics required to justify compensation and meet clients’ reporting requirements.

For clients to comply with the new regulations a very fine-grained preference and entitlement methodology is required, enabling clients to be set up with subscriptions having entitlements appropriate for their tier of service, and also aligned with their preferences as individual portfolio managers or buy side analysts.

Client portals

MiFID II has also prompted renewed interest in client portals; a well designed and fully interactive portal can support easy access to and consumption of relevant content. It will also provide real-time client interaction and invaluable preference intelligence with which to inform marketing and cross-selling. Banks and brokers can apply their own style and structure to build a ‘shop window’ to highlight their competitive strengths.

Meeting client expectations is one thing, but establishing processes that support the most productive and profitable operations requires a different perspective on customer relationships. Fortunately the nature and volume of the data – covering all aspects of client interaction and service consumption – that must be routinely captured, stored and reported under MiFID II can be leveraged to provide highly valuable business intelligence. With the right tools, firms can use this data to capitalise upon their own competitive strengths and build more profitable client relationships.


For example, greater visibility of how an individual piece of research content performs can provide a guide to client preferences, product life cycles and the most effective authoring styles. It also provides the opportunity to show clients additional content based on what they’re already subscribed to, or what other clients with similar profiles have consumed.

Some banks and brokers are already putting all the key components of client relationships, interactions and metrics into models which can be run from their CRM. Profitability analyses can show activities from quarter to quarter, driven by weightings – high touch to low touch – applied to different activity types. This provides a clear picture of changes in revenue versus activity and hence an excellent indication of performance.  Crucial business insights include:

  • Determine what level of service achieves a given level of revenue
  • Identify most profitable research sectors and analysts
  • Identify most profitable clients, and how this changes over time
  • Comparative performance of individual buy and sell-side analysts
  • Views of client activity over time, related to a particular sector or industry

Inform pricing

The insights that can be derived from the analysis of client interaction data can also help define pricing, which becomes crucial as much of the buy-side moves to agreeing budgets in advance. With the right processes and metrics in place banks and brokers gain a far better understanding of their relationships with individual accounts, how each account compares, how well your firm has serviced them and, vitally, how they should compensate you.

Sell-side customer relationship management moves centre stage in the unbundled era; to capitalise on the opportunities firms must be equipped to meet a new set of regulated customer service expectations with the crucial insights that can help build distinct competitive advantage on a profitable basis.



Published: 06/11/2017