Bank tiers can be defined as follows:
- Tier 1 includes between 20 and 25 global bank assets and/or capital markets price makers with daily trading volume exceeding 50,000 transactions. These banks want software using open architecture on a framework on which they can leverage tools, such as analytics.
- Tier 2 constitutes about 200 international and national banks and/or capital markets price takers, as well as trading volume averaging about 30,000 transactions daily. Such banks seek new technology with a complete vertical integration of functions. Cross-asset functionality is not a concern, except for structuring deals because of the specialized focus of their trading businesses. They desire analytics and a front- to back-office suite to improve transparency and risk management.
- Tier 3 consists of approximately 1,000 banks, including smaller national and regional banks, and capital markets price takers. These banks want cross-asset platforms, but don’t have the requisite IT resources in-house and must rely on vendors. Their biggest concern is implementation risk.
- Tier 4 comprises smaller regional institutions with a primary focus on core banking and limited capital markets trading. Such firms often source their capital markets requirements through third parties and tend to use an ASP approach.