Perspectives & Key Themes from Executives and Market Participants

Recently, SIFMA virtually hosted its Ops Virtual Forum. With two days of presentations and events and hundreds of virtual participants, we gained insights into top-of-mind topics for market participants. Inside this note, we recap just some of what was seen and heard, including:

• Executive View – 2020 market resiliency and what to expect in a post COVID-19 world
• Emerging Technologies – what did/didn’t work during the market turmoil, identifying areas to modernize
• Cybersecurity – Already top of board priorities, focus increases in today’s environment
• Post-Trade Modernization – ecosystem not seamless (paper, human intervention), seeking the path forward
• Digital Assets – nascent market with few examples, will take time to build but investing in infrastructure now

The Executive View

As COVID-19 swept across the globe, the financial services industry went to a roughly 90%-95% work-from-home status almost overnight. As a result of extensive planning, despite unprecedented volumes and volatility, markets remained open and systems operated efficiently. This resiliency in turn maintained investor confidence in markets.

All the technology investments, capacity stress testing and business continuity planning (BCP) over the past decades paid off. As BCP speaks to extreme but plausible scenarios, firms had prepped a pandemic scenario (along with many others). They just did not think this would be the one of all the hypothetical exercises that would go live this year. It also happened so quickly that they were working on a shortened time frame versus the BCP scenario. Yet their planning got the industry through the market turmoil. Just as firms took lessons from past crises and global events (global financial crisis, Superstorm Sandy, SARS/MERS, etc.), they will build the experiences of 2020 into BCP plans going forward.

Now the industry begins to look forward to what the future holds. Below we recap key themes from fireside chats and panels with industry executives as we look ahead to a post COVID-19 world.

The Post COVID-19 World

Speakers indicated they do not expect financial services to go back to the pre COVID-19 operating model. The work-from-anywhere (WFA) world we are in now is expected to continue into the future for a proportion of employees. One panelist indicated firms will move from the 96%+ WFA employee status currently to a model involving to be determined portions of employees: full time in the office; full time remote; and a hybrid, mobile model (few days in/few days out of the office). Each of these models brings different sets of challenges for managers.

It is too early to determine these staffing proportions, and the new work environment will continue to evolve over time. The new work model will also bring strategic considerations around real estate footprints, looking at urban offices versus suburban campuses. All these decisions will have to be thought through based on employee roles. Groups that require in-person collaboration may need to be in the office more often than not, while other roles may allow a more flexible arrangement.

These changes can also bring potential new risks to monitor, one of which is a BCP concern. Protocols for weather-related outages must be extended to the homes of WFA personnel, not just office locations. Firms must establish new ways to supervise a remote workforce. Another challenge in a WFA environment is establishing and maintaining the firm’s culture. Financial services is a relationship based industry. As such, firms will need to find new ways to onboard staff and keep them connected. Firms will also need to evolve training programs, which historically were based on learning by example and shadowing more experienced employees, in-person tactics.

Some of these may be able to be solved with new collaboration tools, technologies to improve capabilities to connect employees and clients differently than in the past. Digital enablement, getting the right tools for WFA and questioning the proper tech setup, will remain in focus as firms adapt to the post COVID world.

Download the full pdf report to continue reading and register to watch sessions on demand at www.sifma.org/ops-virtual-forum.

Author

Katie Kolchin, CFA
SIFMA Insights

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