MOTION: This house believes that Sales roles & Product roles have become a false distinction.

Within banking and financial technology firms there is often a division between those that develop products, and those that sell products. Financial Intermediaries look at ways to reach more clients, deepen their relationships with existing clients, and ensure they are not displaced by the competition. Drivers for product innovation have recently included advances in Technology,  Cost of Capital, as well as Regulation (more in forthcoming blogs).

Examples of this product innovation includes; 1) Faster networks and data transmission have enabled electronic Direct Market Access (DMA) for clients, rather than sole reliance on voice desks and trading pits. 2) Due to increased investor sensitivity around cost of funding positions, Brokers have subsequently made information around margining and collateral available to end users, closer to the point of trade. 3) MiFID II Regulation requires identification and testing of execution algorithms which has spurred the development of enhanced technical development and testing capabilities. In each of these three cases, new products and services are developed and distributed by banks (and their technology providers). But to what extent does the development of these products require different teams to sell them?

Stepping back in history (well at least 15 years) bank trading desks had another, comparable temporary distinction between roles.  Sales-People talked to clients, provided market colour, but never got their hands dirty with the market trade itself – shoes were normally resting up on the desks and telephones were preferred to email.  Seated opposite them (and before that on the exchange floors) were the Execution Traders – fingers and eyes often glued to their keyboards and screens, awaiting a shouted, hand-gestured order, or a flying paper ticket. Technology helped remove this divide, and create the hybrid, Sales-Trader or Sales-Execution. Simpler execution, client familiarisation with trading, and a range of order management tools (see earlier blogs) meant there was no longer any need for the earlier specialisation of Sales vs Trader.  The roles became a false distinction.

Today’s set of products are more advanced in many ways.  From the client’s view, it is also often a simpler product – putting the controls back into the hands of the end investor and removing intermediaries and manual steps. Products are developed through a closer relationship with clients. Software vendors interact closely with banks and ‘sponsor’ new products. Banks test new ideas with proof of concepts, and pilot clients. Clearing Houses canvas members prior to new product launches – trying to align the buyside and sellside to their new clearable contract or service. All of this requires the Product Heads to be front and centre with the end clients. Generalist Sales teams can only do so much, and often the client will know more than them.

Although there is a need for sales discipline, this expertise is best delivered as part of Product (rather than separate to it).

Norton Edge provides Subject Matter Expertise across capital market operational process and technology. By way of full disclosure, the author of this article performed Product roles before being given additional sales responsibilities.