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How Banks Can Enhance Investment Origination

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April 23, 2020

Investment origination, also referred to as deal sourcing, is the lifeblood of an investment bank. At its essence, it's all about scouting for new investment leads and building relationships with the right people in the right sectors. But rise of the Information Age and New School deal origination tactics have changed many industries, and few sectors have been as thoroughly impacted as the world of finance.

Now, deal origination in the 21st century is very different than what it was just a decade ago, and in all likelihood, that steady march towards progress will continue apace. Below, we'll discuss the slow death of the smile-and-dial origination cycle and discover the new tactics that have since improved the deal flow process. Keep reading to learn more!  

Pre-Digital Age

In the past, much of a bank's investment origination was based on two primary factors:

  • Relationship Building - Although relationships are still of significant importance, investment banks were heavily reliant on word of mouth and in-person meetings with the parties who were in the know. A bank's investment origination depended on having members who had a long-established reputation in their marketplace and an expansive network of contacts. It was a time when golf course networking could be seen as the bread and butter of the sourcing process.

    Now, none of this is to say that building relationships isn't every bit as important as it was in the past. Today, however, due to the fact that there are so many players involved on both the buy and sell side of things (increasing levels of specialization), financial deal sourcers are more heavily embedded in their specific capital markets.
  • Cold Calling - "Smile and dial" was once the trial by fire task that every entry level investment banking member had to undergo when working at financial institutions. And although it was moderately effective, it often took dozens upon dozens, if not hundreds of calls in order to drum up even one high-quality lead.

Although the world of smile and dial isn't completely dead in the finance industry, many investment banks that specialize in the lending process have shipped the jobs that drive such marketing and networking initiatives overseas, particularly Asia. They have outsourced this task to highly qualified and educated cold callers because it's significantly cheaper and produces near identical results. By outsourcing their cold calling efforts, commercial banks can spend more time on their financial services and less time on investing banking deal sourcing initiatives.  

Post-Digital Age

A few decades back, the most successful banks and financial institutions were simply those with the largest networks. Today, though, it's more about the tools you use to discover and drive new business. As this marketing metamorphosis continues on, a greater number of banks are turning to modern technology in order to augment their investment origination and help them identify the optimal deal. David Teten writes:  

Many investors report that they used LinkedIn, Twitter, Facebook, and like tools to keep in touch with their professional and personal networks. However, those tools do not address all the unique needs of a VC.  

This is where specialized M&A software such as Sourcescrub comes in, which not only helps increase the quantity of potential deals, but the quality as well. This online sourcing platform, which virtually connects buyers and sellers all over the world, has begun to phase out traditional lead generation techniques, becoming the go-to for commercial banks looking to enhance their efforts in investment banking. The platform enhances investment origination by:    

  • Amplified sourcing data - Aggregates data from dozens of sources and then institutively categorizes and sorts them by fields such as geography, market, and sector. This increases visibility and allows banks to either group or target potential deals based on specific factors.  
  • Casting a wider net - Connects people the world over, uncovering potential deals that would have gone completely unnoticed previously.  
  • Optimized sourcing - Time and effort spent on sourcing high-quality investments is reduced, which not only increases the number of potential deals but also frees up investment bankers to focus on closing deals for their business.  
  • KPIs - The platform automatically logs sourcing efforts, which allows for comprehensive analysis on performance, efficiency, and conversion rates.  

Enhancing Your Investment Origination

The future of investment origination is now intrinsically tied to automated intelligence and powerful software. With the increased competition in the marketplace, perceptive investment banks and private equity firms are embracing new tech such as Sourcescrub in order to optimize their origination efforts and enhance the quality of their leads.  

To learn more about our banking deal origination software and our financial services, check out our blog or call one of our helpful representatives today.


1. BBC news. US economy under Trump: Is it the greatest in history?

2. David Teten. Where are the deals? How VCs identify the next generation of winning companies.

3. Corporate Finance Institute. What is Deal Origination?

4. Harvard Business School. Combining Banking with Private Equity Investing.