There are numerous tasks that fall under the umbrella of "Investment Banking"
Some of these include getting involved in selling and buying of securities, acting as an underwriter, playing the role of an agent for other corporations which are issuing securities, maintaining markets for the already existing securities, providing advisory services to investors and many more. Such a wide range of services that are offered, give numerous opportunities for the growth of these organizations. However, this variety has a flip side to it. There is a substantial complexity in the workings which investment banking brings with itself. This complexity, in turn, causes the management to start searching for a medium for "evaluating performance" of its operations. To state in other words, BSC (Balanced Scorecard) with KPIs (Key Performance Indicators), serves the purpose of measuring the organizational progress as it moves towards the achievement of its strategic goals.
In the present scenario, indicators like "% of investments that fetched ROI, equal to or more than the expected value", "Proportion of revenue brought by each service offered", "Average rise in Investment: Revenue Ratio" and "Maximum drop experienced in ROI" can be used for assessing Financial situation. For Internal Operations, these can be "Number of services offered", "Number of alliances or joint ventures with Global Top Players" and "Frequency of revising performance evaluation and reward systems" can be employed. The third perspective that relates to growth can have parameters such as "Rise in Competitive Position in last 5 years", "Rate of Expansion" and "% increase in the contribution of each service". Lastly, Risk can be kept within the tolerable limits by following KPIs like "Tier I capital", "Capital Adequacy Ratio" and "Number of instances when restructuring was done in t he organization".
Apart from the complicated nature of operations conducted under these companies, few other challenges which stand in the way of Investment Banks are the severe competition a player has to face for not only thriving but also for surviving on the platform and the way it connects to the international financial happenings. The mushrooming growth of such organizations has led to uncountable firms fighting for market share. Further, owing to the fact that trade in securities is an important portion of their services; crests and troughs in the stock markets of various nations have a direct bearing on the profitability of these organizations. Lastly, numerous events related to closure of investment banking firms in USA and other countries show the significance of keeping a consistent check on the organizational progress and associated risk.
BSC can be termed as a refinement of organizational efforts to quantify the movements that it makes in the path of attaining the pre-set objectives. The most immediate advantage arising from this methodology is the "visibility" that it imparts to the direction in which the organization is heading. Moreover, measurement can be done in any number of perspectives; although the frequently used ones relate to Financial Scenario, Customer perspective, Internal Operations and Growth of the firm, one can re-frame each or all of these perspectives as per the needs that are specific to the organization.
Using a systematic procedure such as BSC ensures that the teams and groups at the company know "what they are expected to do and how much". This strategy of clear and specific communication initially dilutes, and finally eliminates the traditions of "hit and trial", which employees often get into. In other words, by creating a situation where every effort pays, an organization elevates the instances of hitting the bull"s eye.