AFME: Pandemic acted as a “call to arms” for the post-trade industry to improve “cumbersome” technology
The COVID-19 pandemic was, according to Archie Stebbings, partner at management consultancy Oliver Wyman, a “call to arms” for the post-trade industry to improve “cumbersome and outdated” technologies.
Stebbings spoke at the Association for Financial Markets in Europe’s (AFME) 14th annual European Post Trade Virtual Conference, where he discussed the impact of COVID-19 on capital markets and post-trade settlement.
Regarding the positive impact of the post-trade sector’s response to the early days of the March / April 2020 pandemic, Stebbings said, “By and large, the market functionality has been exceptionally consistent and geared towards keeping things moving with the transition of almost 100 percent of the core operations and technology departments to a home working environment. “
“Post-trade functions have been performed seamlessly for the most part as local situations and lockdowns came into effect and market volatility was experienced in certain asset classes.”
Speaking of the post-trade sector for the past 18 months, Stebbings said he had “seen a number of adoption technologies being streamlined,” and that the need for hybrid labor during the height of the COVID-19 pandemic had helped To grow cumbersome tasks and technologies that had long been problematic in many post-trading companies.
Stebbings commented that certain areas of the post-trade sector felt “particularly vulnerable” in the first few weeks of the pandemic and that “a high premium and focus was placed on coordination and collateral management in particular”.
Accompanied by Stebbings on the panel was Maurice Evlyn-Bufton, CEO of financial advisory firm Armstrong Wolfe, who said there was “an industry response to the COVID-19 pandemic to operationalize it as soon as possible”.
“Both the buy and sell sides were as compliant as possible while allowing for very unique situations at the start of the pandemic,” he added.
Moderator Alan Cameron, Head of Advisory FIC Client Line at BNP Paribas, then asked Stebbings and Evlyn-Bufton for their opinion on the different responses to COVID-19 from a regional perspective and how different attitudes in different regions affect the ability of post-trade – Companies to continue their processes efficiently.
Stebbings said it depends on the “timing” and that almost every country will have a “hard or soft lockdown” at some point.
“The duration and severity of the restrictions varied, but the post-trading business continuity responses were similar. The focus of digitization was omnipresent, but the crisis cycle in the regions was different, ”Stebbings continued.
“For example, India’s latest wave came six months after the US and UK experienced their worst wave yet. But in all regions, a real-time mode of communication seemed to be the way to go – the speed and relevance of the information to be delivered in the post-trade sector was a priority. ”
Evlyn-Bufton commented, “The added challenge for post-trade companies was that they were forced to make more decisions under state law at the state level, which rested with the state commissioner.”
Cameron went on to ask Stebbings and Evlyn-Bufton if they believed the post-trade sector had reached a “new normal” in terms of changes since the start of the pandemic.
Evlyn-Bufton said: “[Financial services is] experience a human capital risk. From what we hear and see, graduates and those who have been in the business for less than 10 years are suffering from significant brain drain. “
“Millennials and younger people make different career decisions than their older colleagues. And I think that is one of the challenges for the industry to ensure that its existence strengthens its position as one of the industries of choice for tomorrow’s leadership. ”
He added, “The pandemic has given people the opportunity to objectively think about their careers. Senior management in the financial services industry is more likely to have a lifestyle that is perhaps more embedded in the job they have chosen, which in some ways is very much tied to their identity as a person. “
As a final question, Cameron asked if post-trade productivity had increased due to hybrid labor and investments in technology during the pandemic.
In response, Evlyn-Bufton noted, “There has 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 innovate in these areas to be able to help.”
From a recruiting perspective, Stebbings concluded, “There has been a significant change in the way companies with fairly rigid and rigid recruiting policies respond to turnover as turnover increases.”
“[HR departments in financial services] ask themselves how they can develop further in order to attract talent, but also how they can keep the talents they already have and enter this new world order. “
“This is a prerequisite for achieving the efficiency that the market expects from its providers,” concluded Stebbings.
