With the spread of the coronavirus and the effects of government response measures, banks had to act quickly in recent weeks. Their focus has been on two challenges - the smooth transition of employees into the home office and the enormous volume of transactions caused by the ‘irritated’ financial markets.
The good news is that most German banks have been able to deal with the exceptional situation immediately, so that their productivity was unaffected or only slightly affected. Others, on the other hand, have been set back by the sudden change of circumstances. What is the reason for this?
The example of the pandemic, which had come as a surprise and was not part of any bank’s emergency plan, reflects the levels of digitization activities banks have undertaken in recent years and which are now paying off. Institutions that are already advanced or very advanced in their digital transformation were able to react immediately to the situation. Where little had been invested in the digital transformation, institutions were not only held back by the lack of the necessary IT architecture and remote software for home working, they were also hit by the lack of effective remote working processes.
WHAT DOES A SUCCESSFUL RAPID RESPONSE CAPABILITY LOOK LIKE?
Here is an example of a successful rapid response. At a large German bank, split teams were set up to test the performance of IT systems and remote access. The biggest challenge was to continue trading via home-based operations, while adequately handling trading volume peaks between the front and the back office. Above all, the legal situation had to be assessed, as internal protocols needed to be observed for trading, and mandatory MaRisk requirements had to be considered. These include certain transaction identifiers and transaction details that must be recorded and documented. Here, the internal requirements were adjusted at short notice in consultation with Legal & Compliance, and remote working was made possible within the legally prescribed framework.
In addition, all employees needed to be able to work remotely with immediate effect from the start of the lockdown, which meant the provision of a sufficient number of monitors of an adequate size for trading. The bank provided 600 screens within a very short time to efficiently operate Bloomberg, Reuters and trade booking systems from home.
After the outbreak of the pandemic, banks’ focus was on maintaining line functions and tasks. However, many institutions were also able to continue project activities and use external staff. Here too, most of the staff have worked from their home office, maintaining teamwork via collaboration tools such as Skype or MS Teams. To maintain the team spirit in times of physical distance, many teams take virtual breaks together, sometimes even involving their children in telephone conferences.
CONCLUSION: DIGITIZATION PAYS OFF
The major bank in the above example has shown how to successfully convert almost 5,000 internal and external employees into home-based workers in the shortest possible time and without losing productivity. Even the trading division - previously an unthinkable area for the home office - was successfully relocated. The central message here is - digital transformation wins.
After almost three months of working from home and under unprecedented conditions, our old ways of working are not likely to return soon, but will we ever work again like we did before the corona crisis?
Many companies and their employees have had to get used to new working procedures and new communication channels. Over time, it has become apparent that many consider themselves more productive when working from home (where childcare provision is adequate and home schooling needs have been taken care of). In addition, working from home saves time, money, energy (and nerves) as there is no commute to the office.
As people look forward to going back to the office as a form of normality, it is clear that this will not be easily possible. The handling of regulations and the approaches for returning to work differ across the banking industry. On the one hand, in some, mostly larger banks, there are strict rules, which impose, for example, that only a maximum of a quarter of a group or department may be present. On the other hand, there are financial institutions whose entire staff are already working from their offices, with the necessary hygiene standards in place (e.g. specified walking routes and separate elevators).
There are also big differences in banks’ trading rooms setups. Even now, after some COVID-19 restrictions have been lifted, three quarters of traders are still working from home, facilitated by the effective provisions described in the earlier example. However, there are many banks whose organizational and technical restrictions made it impossible for their trading staff to work remotely at all during the pandemic, so traders continued working in the bank, having moved rooms to maintain social distancing.
It is obvious that banks have dealt with the crisis in different ways. It remains to be seen how the transformation of our industry’s working methods evolves and what will become normal for us in the future.
In the meantime, the current situation where most employees are home-based, is forcing banks and other financial firms to focus on digitization and new ways of working, more than ever before. Recent investments made for these purposes have had a significant effect on productivity during the crisis and will continue to have a positive impact on addressing future challenges, right up to the post-crisis recovery.
Andreas Pfeil, Partner
T +49 69 9760 9106
M +49 17 2165 3932