Grygo is the chief content officer for FTF & FTF News.
Like millions of Americans, I got my second vaccination shot over the weekend and I allowed myself to start thinking about a time when the COVID-19 pandemic and lockdown might be history.
Of course, it’s difficult to entertain such thoughts when there are still hotspots in the U.S., and when several parts of the world such as Brazil and India are still battling the virus via new waves of infection that are overwhelming health care systems. We are hoping and praying that international and regional efforts will be able to help those in desperate need. This unrelenting pandemic has reminded us that global problems require global responses.
For the securities industry, I’m sure many firms have been asking the same big question many times: What will the post-pandemic world will look like? My sense is that they have been coming to different answers at different times during this seemingly never-ending pandemic.
As firms imagine a post-pandemic planet, I think some of them will remember that there were moments of real post-trade pandemic pain and panic. Post-trade operations were stretched to their very literal and figurative limits during various lockdowns and after. We’ve been reporting upon surveys that say that some firms had no major adjustments while others had backlogs of broken transactions and major kinks in their securities operations chains.
The pandemic also caused other Ops problems to emerge. Many manual systems that remained so because of internal corporate political reasons, simple inertia, or outright neglect became major pain points that have been haunting operations people throughout this crisis.
Yet, those situations with operations problems caused by highly complex transactions were turned into opportunities for innovation – Ops teams were up to the challenge and then some.
Firms, particularly on the buy side, also had reason to breathe a huge sigh of relief because they had embraced cloud computing — the very nature of the cloud facilitates remote securities operations. Even front-office traders and their support staffs benefitted from the flexibility of the cloud — and extremely fast networking. Oracular trading rooms were recreated in dens, garages, attics, guest rooms, and kitchens.
There has been a downside to so much remote computing, though. It’s been a field day for hackers and yet a true test of cybersecurity systems.
Remarkably, as firms address their pandemic Ops woes, they have found time to seize upon the benefits of artificial intelligence (A.I.), particularly machine learning (ML), and robotic process automation (RPA). Explorations of these areas were well underway before the pandemic hit. But necessity is the mother of invention and systems that make ample use of A.I./ML and open source technologies are helping firms make sense of the recurring floods of securities-related data.
I think A.I./ML and RPA have legs because they can be used to replace tedious tasks such as the reconciliation of broken transactions and for high-end purposes such as data quality management, post- and pre-trade analytics, optimizing workflows, and true straight through processing (STP). These technologies could help firms move closer to the Nirvana of accurate data that supports their various securities-related agendas.
If I put on my rose-colored glasses for a moment, I think I can foresee a new flexibility for securities trading firms. The hard-edged, Old School rules that were implemented (and never properly questioned) are giving way to a mix of pragmatism and hope for a better Ops world.
I think firms are finding that some Ops staffs love the work from home (WFH) phenomenon. So, long-term WFH conditions may become commonplace and may help with the high costs of real estate and maintenance. I don’t know how far firms will go in customizing WFH arrangements but it’s worth a try to boost staff morale especially after a horrendous crisis. Suddenly staff member satisfaction will matter, and staffs may get a little more leverage.
Yet I fear that manual systems may not be on their last legs even though they should be. I think the majority of firms would love to move to full automation, and they might do it as part of a real digital transformation overhaul. But the task may be too Herculean for some firms. Nonetheless, the seeds for permanent change have been planted.
As we try to glimpse at the future, it’s interesting to note that virtually no major securities industry figure has said publicly that things will return to normal as if nothing has happened.
Most have said that it would be a shame not to learn some valuable lessons from a very dark time.
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