All material subject to strictly enforced copyright laws. © 2022 Euromoney Institutional Investor PLC group
CommentGC View

And the client lived appily ever after?

HSBC Canada Square office London

HSBC’s new app for issuers, shortly to be rolled out across the bank’s primary markets divisions and downloaded by clients directly, is a welcome change for a market that’s seen limited technological progress. It’s a clear step forward, and likely to be copied widely. But this could be the very worst outcome for issuers.

A roadshow app ought to be almost a contradiction in terms. What could be more archaic and low tech than a parade of face-to-face meetings across continents?

A roadshow is expensive, inconvenient and sometimes exhausting, consuming huge amounts of time for bankers and funding teams alike, all for the grandiose purpose of delivering remarkably similar presentations over and over again to remarkably similar audiences. 

If one is going to roll out a technological revolution in the primary markets, start by pulling the plug on the whole exercise, using the well-established technology of video conferencing, phone calls, and PDF documents to do away with a roadshow entirely.

But all this tech is old news, and the persistence of the roadshow points to the underlying difficulty of easing the primary markets into the 21st century. People like people. Funding commitments come more easily when hands are shaken, bread is broken and trust is created.

Of course, the roadshow is more important for an IPO or to raise funds for a transformative acquisition than for a routine funder with a solid IG rating. But it’s still a clear cost saving for most issuers. Taking the time to go on the road means better execution, lower coupons, higher prices and a raft of intangible benefits for finance teams.

So if they have to continue at all, why not make them easier? That’s the aim of HSBC’s new “MyDeal” tool, announced last week. It is supposed to smooth out logistical issues, collate investor feedback, manage pitchbooks and deal documents, and allow convenient access to bookbuilding progress and investor analytics.

The bank deserves plaudits for innovation — for seeing the opportunity, for taking the time and resources to build for the future and for navigating the complicated internal politics inherent in any major IT project. Having a head of digital that also ran a syndicate desk can’t have hurt, but it’s a definite step forward for HSBC and for the market.

If the app is well received — and it seems to be — it means more will be on their way. Investment banks are client service businesses par excellence, and if clients like HSBC’s app, perhaps even enough to mandate HSBC, at the margin, you can be sure every other bank with a decent DCM operation will be building one too.

This, of course, is exactly the wrong outcome.

Clients will have, at first, a plethora of competing platforms to log into, with every bank active on a deal keen to put their offering first. “App bank” might become a role like “billing and delivery” or “press bank”.

‘Eyeball data’ will also prove valuable, as banks increasingly use their technology to create ‘data lakes’. If a certain client spends most of their app time drilling into allocation segments on their niche currency issues, or investigating investor concerns about political sentiment, or examining the details of their presentation, that’s valuable intel to the next banker that goes to pitch them. More app time in your app means more understanding of what clients want.

But for clients themselves, it will be another complex piece of counterparty politics to handle, and, frankly, a faff. Learning one app is easy and intuitive. Learning 10 separate apps, each subtly different, is a giant pain.

The electronic trading business in bonds has been here before. Banks looking for new ways to serve investors launched a plethora of platforms to access their liquidity — each separate, each requiring a login — creating challenges for investors wanting to speed up execution.

Dozens of trading platforms sprang up outside the banks as well, each trying to tempt firm liquidity from the major dealers, but adding to the confusion. While every offering promised improvements compared to old-fashioned phone-and-chat execution, taken together, they rendered trading harder, by fragmenting liquidity. Some of the independents failed, some of the banks scaled back their offerings, but true consolidation has yet to arrive.

So, really, it would be better if this doesn’t happen in the world of roadshows and issuer-focused apps.

HSBC could license its offering, or better, spin it out and separate it after testing is done. A trusted tech provider, or industry co-operative, could emerge with a competitor app, encouraging the market to rally around it to create a standard — hopefully, one which doesn’t gouge the business on pricing and responses to user concerns.

At the very least, banks could open up the least-sensitive data they’ll present on the app in a standardised format, allowing enterprising issuers to build their own tools and integrate data in their treasury management processes.

None of these seem likely yet — indeed, no bank has broken cover yet with its competitor app — but the road ahead seems depressingly clear, and it will get complicated before it gets simpler. This is a familiar route to innovation, and most new technologies go through a period of difficult, early adopter ferment, before settling into their mature formats. Roadshow apps are surely no different.

After a short and sweet beginning, expect furious competition, before an app-ropriate model emerges.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree