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As bankers slowly start returning to their offices, they will find the old familiar home-away-from-home a very different place to the one they left in March.
There will be fewer people in the building; bigger gaps between desks; plexiglass partitions; one-way paths marked around the trading floor; and, once you get to the meeting room or kitchen, a line to join for marked spaces inside. Bankers may have to wear masks in these communal spaces. They may also face temperature tests before even getting into the building.
Back in the first quarter of 2020, their bosses had not been prepared for the lockdowns. Business continuity plans, regularly rehearsed since the terrorist attacks of 2001, had seen traders and support staff congregate at alternative sites.
Having 90% of staff work from home was never part of these plans. Now it is set to become a semi-permanent state of affairs.
Banks aren’t likely to follow technology firms such as Square or Twitter in suggesting that all staff work from home indefinitely. But, having had more time to plan for the reopening, they expect to have far fewer people in the office, with some staff coming in on rotation and perhaps 25% or 50% working from home.
Technology companies reckon the big banks employ just under 200,000 traders around the world, each supported by an average of close to three so-called ‘regulated users’ working in compliance, operations, settlement and risk management.
There is much more flexibility for regulated users to work away from the trading floor and many of them will spend more time doing so under banks’ now-emerging, hybrid home-and-office working models.
One of the few pleasant surprises of the early stages of this crisis has been how well sell-side dealers coped with the spiking volumes and extraordinary volatility across markets in March and April, when most were in lockdown.
That was when voice trading reasserted itself as the preferred method for the largest institutional investors to negotiate big changes to their portfolios.
In the office, traders have so-called ‘turrets’, desktops with all the market data they need streaming through them. They also have multiple dedicated direct phone lines to their biggest counterparts on the buy side, as well as straight-through connections to their own firms’ execution-management systems, regulatory reporting and risk management.
Only a few had been able to install this kind of hardware in their homes before governments announced lockdowns. Thankfully, there are now soft turrets.
IPC is one of the leading suppliers of trading communications technology to the sell side through its Unigy platform, built on a service-oriented architecture, which means it can be accessed remotely, with traders able to connect through their banks’ virtual private networks (VPNs) back to head-office trading systems run on local servers or, increasingly, on the cloud.
“You do not need to have physical hardware devices from the office to access your counterparties on IPC’s Unigy platform,” says Robert Santella, chief executive of IPC. “We also offer a soft turret solution called Omni that you can easily download onto your home computer or even onto your iPad.
“With Omni, you have direct phone lines to multiple counterparties set up within a matter of minutes.”
IPC had been marketing this as a service for traders on the move: a way to connect them back to the office during business trips. The lockdown saw a big increase in take up.
“We sold over 12,000 Omni licences in a few weeks, many times more than we had in the previous six months,” says Santella.
The next step for banks is to better connect traders now on these smart new systems to regulated users, often still on older and cheaper ones.
“Now that they have seen how productive traders can be working from home, banks are planning a way forward,” says Santella. “What they have learned is that generally older platforms did not serve them so well for voice trading, distribution of market data or connections to execution-management and order-management systems. So they now want to move more staff onto newer platforms as quickly as possible.”
It is just as well that most trading operations, according to the banks’ first-quarter results, profited handsomely from high volumes and fat margins in the market panic that greeted lockdowns.
Now that they have seen how productive traders can be working from home, banks are planning a way forward- Robert Santella, IPC
They need to spend some of that bounty now in the not-so-great reopening.
“Two-year plans to upgrade and modernize systems are now being accelerated,” says Santella. “Some banks are finding their middleware for monitoring risk exposures does not translate so easily to working from home.”
Regulatory compliance and risk are among the most powerful departments in banks, and those systems, just like voice trading in March and April, will now need to transition to work-from-home. That is unless staff who don’t have their own drivers quickly accept taking trains, tubes and metros back to the office.
Euromoney speaks to one bank chief executive who was surprised to discover that his banks’ security systems prevented him from printing documents at home.
First, he tried to negotiate around this. Now his driver now brings him to the office each day to join just a few others on the top floor. There, prioritizing technology spend is one of the new priorities.
“We are seeing pleas for greater bandwidth,” says Santella, “especially from traders in markets where the added latency of connecting back to head office servers through a VPN brings a disadvantage. And banks are also looking more at natural language processing to deliver voice-to-text reports from traders working remotely straight to their compliance staff. That might also be a vast store of potentially valuable market insight.”
Samir Pandiri, a former banker at BNY Mellon and JPMorgan and now president of Broadridge International, a provider of advanced technology to banks and asset managers relating to artificial intelligence, blockchain, the cloud and digitalization projects, told Euromoney during the lockdown that banks would have to re-imagine their technology for the years that follow the pandemic.
They would need to review their entire technology stack, urgently digitize manual processes, outsource certain services to specialist providers to mutualize costs and ensure timely access to the right data.
Returning to these topics at the dawn of ‘the day after’, in mid May, Pandiri sees two new critical issues as working from home, which once seemed likely to last just a few weeks, becomes the new normal.
“The extent to which very large percentages of staff can continue to work from home depends on banks’ different business models and client types,” Pandiri tells Euromoney. “For example, if you are a large Asian bank with a small presence in the US, the US staff may be able work from home for the foreseeable future. But it now becomes essential to quantify the productivity of those working remotely and assess whether or not it declines if they cannot collaborate closely in the office.”
In the ego-driven world of investment banking, and especially through a 10-year bull market in M&A, senior staff might have invited their bosses to take a wild guess about their productivity by looking at the P&L and at the same time think on what job offers they might have received while calculating their bonus.
But that world is being consigned to history.
“The issue can in part be addressed by enabling technology to monitor productivity,” says Pandiri.
Large numbers of bank staff now, whether full-time employees or contractors, are themselves technologists: think of Goldman Sachs’ famous corps of engineers.
It now becomes essential to quantify the productivity of those working remotely and assess whether or not it declines if they cannot collaborate closely in the office- Samir Pandiri, Broadridge International
“One key measure in the productivity of coders is defect density,” says Pandiri. “Changes in the number of coding defects, relative to the expectations of internal and external clients and what they report, is important to monitor.”
There are obvious equivalents for those few remaining bank staff that actually deal with money, trade bonds or arrange financing.
“It is hard to quantify what is missed from not having those water-cooler conversations and team huddles,” says Pandiri. “But you can measure how many hours people are logged onto their computers, how many meetings they have in their calendars, what percentage of those are internal meetings or meetings with clients, whether staff have met deadlines for projects.”
We are all glorified call-centre staff now, having the number and length of our calls measured by middle management.
Pandiri sees another, tougher question for banks to grapple with in the months and quarters ahead, one that is often discussed but hard to measure: how to assess employees’ wellbeing.
“Productivity measures may show people are working hard, but wellbeing is a whole different matter and much harder to assess scientifically,” says Pandiri.
“Firms can – and many already do – offer access to mental health professionals. And at least there are a lot of good communications tools now for management and staff to discuss what is working well and what is not. We are not starting from zero on this.
“But firms need to think about ways to collect data related to wellbeing and digitize it so that they can at least observe changes in the trend line and plan ways to respond.”