In the early part of the Covid-19 pandemic, as lockdowns set in around the world, turbulence hit the global financial markets in a way not seen since the height of the financial crisis in 2007/8. This time, as busy open-plan offices fell quiet, thousands of employees, from traders and back-office operations teams, to salespeople and IT support staff, moved to log on from the safety of their homes. Long-established financial institutions that had previously been reluctant not just to fully embrace home working but speed up adoption of other types of business technology suddenly had to start signing-off on those decisions. Changes that would previously have taken months or years were pushed through in a matter of days or weeks.
As orders flooded in amidst a sharp rise in market volatility, staff worked late to ensure they were processed correctly, filed in under the right accounts, and funds and securities transferred. Growing backlogs of trades meant that the clearing houses took longer and longer to fully settle them, and investors suddenly had no idea whether a trade had gone through or how much stock they now held. Small brokers struggled to know their exposure and it was a nervous wait until the end of the trading day, or longer, to find out what the fallout from the day’s trading had been.
The situation was similar for the specialist technology companies that support the financial sector. For Sinara, a London software house that builds and supports IT systems for exchanges and trading firms across the financial markets, it was also a case of a speedy transition to remote working. “We had actually been testing out our remote work infrastructure as we had been investing in business continuity,” says Steve Dobb, a founding director of Sinara. “We just didn’t expect to be using it for real so soon, and for so long. We established the business back in 1989 and have seen off multiple recessions, but this was a transformation like no other.”
While most people are at least familiar with the idea of stock or commodity exchanges and the buying and selling of securities, there is a whole series of events that must take place in the background for a trade to actually become ‘settled’. A complex patchwork of IT systems across multiple firms does a lot of the legwork, but there is still a need for significant manual involvement to make sure it all goes smoothly. At a recent derivatives industry conference in London, panellists agreed that financial firms had to invest in modernising their post-trade processes, create more integrated IT solutions, and remove manual touchpoints.
“While the paper and fax-machine days are (well, mostly…) in the rear-view mirror,” says Hamish Adourian, Head of Sales and Marketing at Sinara, “We now often find a whole series of low or legacy tech, email or manual processes that can cause real bottlenecks for a financial business once it hits turbulence in the markets.”
Alongside modernising their IT, with their employees increasingly at home at least part of the time, the major banks and brokers will have to provide software that can be updated quickly and efficiently. Large, slow systems that consume vast quantities of data will have to be adapted or replaced in order to be effectively run from home offices. The transition to the cloud will likely accelerate as companies decide to outsource the hosting and operation of these complex systems. Security will become even more of an issue as organisations dealing with sensitive financial data will have to ensure it is managed robustly and cannot be leaked out of a staff member’s home laptop, mistakenly or otherwise.
“There’s been plenty of discussion about how work will change now post-pandemic,” concludes Adourian, “but I think it’s also worth asking how technology itself will change, and how it can benefit not just customers but employees of the financial industry, which after all is critical both to the UK and global economy.”
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