AFME: Pandemic acted as a “call to arms” for post-trade industry to improve “cumbersome” technologies
19 October 2021 UK
Image: zef art
The COVID-19 pandemic acted as a “call to arms” for the post-trade industry to improve “cumbersome and outdated” technologies, according to Archie Stebbings, partner at management consulting firm Oliver Wyman.
Stebbings made the comments at the Association for Financial Markets in Europe (AFME) 14th Annual European Post Trade Virtual Conference where he discussed the impact of COVID-19 on capital markets and post-trade processing.
Focusing on the positives of the post-trade sector’s response to the early days of the pandemic in March/April 2020, Stebbings said: “Broadly speaking, market functionality was exceptionally consistent and dedicated to keeping things moving, with the transition of moving almost 100 per cent of core operations and technology departments to a home working environment.”
“Post-trade functions were, in the most part, carried out seamlessly as local situations and lockdowns came into force and market volatility in specific asset classes was experienced.”
Speaking about the post-trade sector over the last 18 months, Stebbings said he had seen “a number of adoptive technologies that have been streamlined”, and that the need for hybrid working during the height of the COVID-19 pandemic had helped to enhance cumbersome tasks and technologies that had created long-standing issues within many post-trade businesses.
Stebbings commented that there were certain areas of the post-trade sector that felt “particularly vulnerable” in the initial weeks of the pandemic and that a “high premium and concentration was placed on reconciliations and collateral management, in particular.”
Accompanying Stebbings on the panel was Maurice Evlyn-Bufton, CEO of financial advisory firm, Armstrong Wolfe, who said there was “an industry reaction toward the COVID-19 pandemic to operationalise and as quickly as possible.”
“Both the buy and sell side were as compliant as they possibly could be while still allowing for very unique situations at the very start of the pandemic,” he added.
Moderator Alan Cameron, head of advisory FIC client line at BNP Paribas then asked Stebbings and Evlyn-Bufton their opinions on the different reactions to COVID-19 from a regional perspective and how different attitudes in different regions affected the ability for post-trade firms to continue their processes efficiently.
Stebbings said it depended on the “point in time” and that at some stage almost every country had a “hard or soft lockdown”.
“The length and severity of restrictions have varied but responses to business continuity in post-trade were much the same. The focus of digitisation was ubiquitous, but the cycle of crisis in regions differed”, continued Stebbings.
“For example, India’s most recent wave came six months after the US and UK experienced their worst wave to date. But across all regions, a real-time mode of communication seemed the way to go — the speed and relevance of information to be delivered in the post-trade sector was prioritised.”
Evlyn-Bufton commented: “The additional challenge for post-trade companies was that they were forced to discharge and empower more decision making to country level governmental laws which rested with the country officer.”
Cameron went on to ask Stebbings and Evlyn-Bufton whether they thought the post-trade sector had reached a “new normal” in terms of how it has changed since the start of the pandemic.
To this Evlyn-Bufton said: “[Financial services is] experiencing a human capital risk. From what we’re hearing and what we're seeing, the graduates and those who have been in the workforce for less than 10 years are suffering from quite significant attrition.”
“Millennials, and those younger, are making different types of career decisions than their older counterparts. And I think that is one of the challenges that the industry has in relation to making sure that its existence reinforces its position as being one of the industries of choice for tomorrow's leadership.”
He added: “The pandemic has given people the opportunity to think objectively about their careers. Senior management in financial services are more likely to have a lifestyle that is perhaps more embedded within the job they have chosen which, in a way, is very much tied to their identity as a person.”
As a closing question, Cameron asked if the productivity in post-trade had gone up because of hybrid working and investment in technologies during the pandemic.
Answering this, Evlyn-Bufton highlighted: “There’s been an industry push to rethink the way we can look at improvements in clearing and settlement, and in particular how predictive analytics and technologies like machine learning can help with innovation in those areas.”
From a recruiting perspective, Stebbings concluded: “There’s been a significant change to how businesses with quite staid and rigid HR recruitment policies are reacting to attrition, because attrition levels are going up.”
“[HR departments in financial services] are questioning how they can evolve to attract talent, but also questioning how they can keep the talent they already have and how they can step into this new world order.”
“That is going to be a prerequisite for delivering the kind of efficiencies that the market expects from its providers”, Stebbings concluded.
Stebbings made the comments at the Association for Financial Markets in Europe (AFME) 14th Annual European Post Trade Virtual Conference where he discussed the impact of COVID-19 on capital markets and post-trade processing.
Focusing on the positives of the post-trade sector’s response to the early days of the pandemic in March/April 2020, Stebbings said: “Broadly speaking, market functionality was exceptionally consistent and dedicated to keeping things moving, with the transition of moving almost 100 per cent of core operations and technology departments to a home working environment.”
“Post-trade functions were, in the most part, carried out seamlessly as local situations and lockdowns came into force and market volatility in specific asset classes was experienced.”
Speaking about the post-trade sector over the last 18 months, Stebbings said he had seen “a number of adoptive technologies that have been streamlined”, and that the need for hybrid working during the height of the COVID-19 pandemic had helped to enhance cumbersome tasks and technologies that had created long-standing issues within many post-trade businesses.
Stebbings commented that there were certain areas of the post-trade sector that felt “particularly vulnerable” in the initial weeks of the pandemic and that a “high premium and concentration was placed on reconciliations and collateral management, in particular.”
Accompanying Stebbings on the panel was Maurice Evlyn-Bufton, CEO of financial advisory firm, Armstrong Wolfe, who said there was “an industry reaction toward the COVID-19 pandemic to operationalise and as quickly as possible.”
“Both the buy and sell side were as compliant as they possibly could be while still allowing for very unique situations at the very start of the pandemic,” he added.
Moderator Alan Cameron, head of advisory FIC client line at BNP Paribas then asked Stebbings and Evlyn-Bufton their opinions on the different reactions to COVID-19 from a regional perspective and how different attitudes in different regions affected the ability for post-trade firms to continue their processes efficiently.
Stebbings said it depended on the “point in time” and that at some stage almost every country had a “hard or soft lockdown”.
“The length and severity of restrictions have varied but responses to business continuity in post-trade were much the same. The focus of digitisation was ubiquitous, but the cycle of crisis in regions differed”, continued Stebbings.
“For example, India’s most recent wave came six months after the US and UK experienced their worst wave to date. But across all regions, a real-time mode of communication seemed the way to go — the speed and relevance of information to be delivered in the post-trade sector was prioritised.”
Evlyn-Bufton commented: “The additional challenge for post-trade companies was that they were forced to discharge and empower more decision making to country level governmental laws which rested with the country officer.”
Cameron went on to ask Stebbings and Evlyn-Bufton whether they thought the post-trade sector had reached a “new normal” in terms of how it has changed since the start of the pandemic.
To this Evlyn-Bufton said: “[Financial services is] experiencing a human capital risk. From what we’re hearing and what we're seeing, the graduates and those who have been in the workforce for less than 10 years are suffering from quite significant attrition.”
“Millennials, and those younger, are making different types of career decisions than their older counterparts. And I think that is one of the challenges that the industry has in relation to making sure that its existence reinforces its position as being one of the industries of choice for tomorrow's leadership.”
He added: “The pandemic has given people the opportunity to think objectively about their careers. Senior management in financial services are more likely to have a lifestyle that is perhaps more embedded within the job they have chosen which, in a way, is very much tied to their identity as a person.”
As a closing question, Cameron asked if the productivity in post-trade had gone up because of hybrid working and investment in technologies during the pandemic.
Answering this, Evlyn-Bufton highlighted: “There’s been an industry push to rethink the way we can look at improvements in clearing and settlement, and in particular how predictive analytics and technologies like machine learning can help with innovation in those areas.”
From a recruiting perspective, Stebbings concluded: “There’s been a significant change to how businesses with quite staid and rigid HR recruitment policies are reacting to attrition, because attrition levels are going up.”
“[HR departments in financial services] are questioning how they can evolve to attract talent, but also questioning how they can keep the talent they already have and how they can step into this new world order.”
“That is going to be a prerequisite for delivering the kind of efficiencies that the market expects from its providers”, Stebbings concluded.
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