CEO of IPC, a technology and service leader powering the global financial markets.
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It’s fair to say that the financial industry navigated pandemic-related lockdowns over the last year surprisingly well. Markets performed strongly — the Dow Jones is up over 30% in the past year, for instance — and banks saw record profits. It’s candidly surprising that an industry known for its strong office culture thrived while apart, but then again, if there is a universal business lesson from the pandemic, it’s the degree to which collaboration and communications software empowers remote work.
However, financial industry leaders have been fairly uniform in their perspective that physically colocated teams are still the preferred modus operandi moving forward, at least for markets-facing personnel. Goldman Sachs CEO David Solomon has famously quipped he views the last year as an “aberration,” a sentiment echoed by many of his peers, such as Morgan Stanley CEO James Gorman, who said he’d take “a dim view” of those who did not work regularly in the office. PwC's latest Remote Work Survey found that 68% of employers believe employees should be at their desks at least three days per week to "maintain a distinct company culture."
Compared to major enterprises in other industries that have postponed office returns indefinitely, the financial services industry has been strongly advocating for in-person office environments, and in many cases, for good reason given the nature of the industry. Interestingly, financial services workers reported the second-highest level of job stress and sleep disorders during mandatory lockdowns, and employee motivation also dropped 32% in financial services, according to another recent survey.
The crux of the matter is that finance at its heart is a services industry, and so the workflows and training processes rely more heavily on in-person interactions. In many ways, financial services hearken back to the apprenticeship model in which more junior personnel are taken under the proverbial wing of senior staffers to learn through absorption. Meanwhile, senior financial leaders also lean heavily on interpersonal relationships, not just in the office but on the road meeting with clients face to face and developing the connections that lead to a deep working knowledge of their needs and challenges.
But that’s not to say remote work has no place in finance. Wall Street and its counterparts around the world will never return to working exactly as they did before. In addition to enhanced health and safety precautions, some back-office workers are expected to continue to work remotely. JPMorgan believes 10% of its roughly 300,000 U.S.-based employees may continue to do so. And there is a very healthy role for virtual front- and middle-office operations, just for the right people at the right time. For example, the Bank of England is only requiring workers in the office one day a week from September and has enlisted a network of 250 “digital ninjas” — staff who have helped colleagues to adapt and benefit from new, virtual tools — to provide extra support.
More broadly, firms are also rethinking their trading operations across the board and are acknowledging that while some traders will indeed move back to the office, others have succeeded at home thanks in part to both a new, supportive stance from regulators, as well as software that can monitor trades at home for compliance purposes, so that trading operations are harmonized whether personnel are together or working remotely.
Furthermore, while face-to-face time from their financial partners is certainly appreciated by clients, some of them have found benefits to virtual interactions as well, such as the time saved from travel. Customer behaviors and expectations are not static but have similarly shifted significantly during the pandemic and will lead to greater or lesser demand for certain skills, processes and types of space. Financial institutions must be understanding and accommodative and be prepared to meet those needs in person or virtually.
Lastly, although the ramifications of this unprecedented pandemic are still unfolding, it’s not too early to take into consideration other unforeseen issues in the future that could once again make virtual operations en masse needed. Disaster preparedness is, unfortunately, a key component in the discussion of remote vs. in-person operations, and institutions must be prepared accordingly.
No matter what the future may bring, it’s safe to say the old ways of working are never coming back. The office environment is a key component of the culture that has led Wall Street to thrive, but leaders must also understand that it cannot only be supplemented with virtual operations, but done correctly, they can enhance the culture that has led Wall Street to overcome challenge after challenge.
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