What comes next?
09 June 2020
From the individual worker to major corporations, the ‘new normal’ requires adaption and flexibility to thrive, and some have done better than others, FIS Astec’s David Lewis writes
Image: Shutterstock
When I was at university, there was a forward-thinking lecturer of mine, Cliff, that prophesied that mine would be the last generation to ever have one job. This prophecy, delivered around 1990, was not meant literally in the sense we would only have one employer, but that we would work in one industry or type of work. Subsequent generations would have “portfolio careers” where people would not just move jobs for promotion or more money; they would move because that industry would cease to exist and/or a new, more exciting one would emerge.
Cliff’s statement appears to have held true for me, with 25 plus years in the securities finance industry, across multiple but related roles, and it is certainly also true for those that followed, as industries have significantly contracted or even disappeared since, while many completely new ones have sprung up. Contrast the emergence of the worldwide web and all the associated technical and commercial roles that have developed with it, and the decline of newsprint, publishing and the use of cash in everyday transactions. Jobs that were never expected or imagined before have emerged, as others disappear, often replaced by technology or simply because they were not required anymore.
Banking has been front-and-centre of this change, both being driven by it and, in many ways, driving the change. Witness the rise of internet banking and the demise of the local branch network, for example. Pure internet banks often have no client premises at all. The securities finance and collateral management industry has also been affected, of course, but there is more to do yet in terms of bringing automation and more of an exchange-like approach to the industry, for example. The current global pandemic has only accelerated this effect, forcing a sudden and unavoidable change in working practices, and not only in the location of our work.
As with any industry, remote working is not possible for every role, of course, but the rise of cloud networks, hosted and managed services, etc, means that the location of the user has become much less material. The same technological capabilities that have allowed the growth of offshoring, for example, are now employed to support most users changing physical location with little or no notice. Adding complexity to this change is the tailspin that many stock markets and even economies have been in since the outbreak of COVID-19. The additional volatility, the collapse of many share prices and the potential for the collapse of major industries meant that the transmission of data and the development of actionable information has never been more important as companies and their investors remain on edge.
There have been some notable collapses already, as well as some very significant job losses among some of the world’s largest and oldest employers, from J.C. Penney, which filed for bankruptcy only a few weeks ago to Rolls Royce, the UK-based aero-engine maker, announcing 9,000 job losses here in the UK – one-fifth of its workforce. These job losses are just a fraction of the rising count of unemployed professionals across the world. Both indicate a long-term change coming in their respective markets, but from very different starting positions. Few would argue that J.C. Penney, together with many of its bricks-and-mortar peers, has been suffering from the inexorable rise of internet shopping for years. Unable to adapt in a reasonable time frame, the recent bankruptcy announcement will have been a surprise to few.
At the other end of the time scale, Rolls Royce had been flying high on a seemingly unstoppable growth in the flight industry, including cargo, business and leisure. 2019 saw it receive orders for 2,700 engines, producing 600 wide-body plane engines over the year, representing half the world’s fleet, up from a market share of 22 percent a decade ago. Now, with over two-thirds of the world’s aeroplanes grounded and orders for new planes cancelled, its market has not steadily declined like J.C. Penney’s, it has collapsed almost overnight.
While it is hard to imagine the shopping malls with vast department stores returning, it may be easier to expect a recovery in air travel, once the pandemic has subsided. However, few appear to expect that to happen quickly, and even then, it may be significantly smaller than it was before.
The banking industry appears to sit somewhere between these industries. Automation and the rise of technology replacing manual processes have certainly cut the workforce and likely will continue to do so. The retail side has seen the number of physical branches collapse along with the numbers of staff required to run them. The capital markets segment of the banking industry has also had to move with the times, matching long-term trends with increased automation and greater technological efficiency as well as delivering short-term responses to events like the COVID-19 pandemic, shifting workplaces while volatility and throughput soars.
The combination of market stress, falling asset prices and the rising spectre of bad debts, as companies and even whole industries struggle to survive the economic impact of the pandemic, has brought the need to have an enterprise view of your bank’s assets and liabilities into sharp focus. The direction of travel towards an automated real-time view of global positions, assets and exposures has been the same for some time but has now been accelerated as market counterparties realise the need to up their game to insulate themselves from as much contagion risk as they can.
Connecting the dots across the previously divided silos of capital markets banking doesn’t just mean an improvement in margins and returns while minimising risk anymore. It may mean the difference between survival and collapse as the focus on liquidity builds across the markets. Undertaking the significant shift in working practises has been satisfyingly successful for many organisations, my own included, but the longer-term implications for some are vast. The potential failure of industries and major employers, together with unprecedented government debt that must be paid off at some point, will force significant change to the way many people work. My university lecturer’s prediction seems to have come true, slowly over time as expected, but now in a rush, as the world pivots to a new normal, with many employees finding themselves unexpectedly on the job market and looking for their next job, quite possibly in a very different industry altogether.
Cliff’s statement appears to have held true for me, with 25 plus years in the securities finance industry, across multiple but related roles, and it is certainly also true for those that followed, as industries have significantly contracted or even disappeared since, while many completely new ones have sprung up. Contrast the emergence of the worldwide web and all the associated technical and commercial roles that have developed with it, and the decline of newsprint, publishing and the use of cash in everyday transactions. Jobs that were never expected or imagined before have emerged, as others disappear, often replaced by technology or simply because they were not required anymore.
Banking has been front-and-centre of this change, both being driven by it and, in many ways, driving the change. Witness the rise of internet banking and the demise of the local branch network, for example. Pure internet banks often have no client premises at all. The securities finance and collateral management industry has also been affected, of course, but there is more to do yet in terms of bringing automation and more of an exchange-like approach to the industry, for example. The current global pandemic has only accelerated this effect, forcing a sudden and unavoidable change in working practices, and not only in the location of our work.
As with any industry, remote working is not possible for every role, of course, but the rise of cloud networks, hosted and managed services, etc, means that the location of the user has become much less material. The same technological capabilities that have allowed the growth of offshoring, for example, are now employed to support most users changing physical location with little or no notice. Adding complexity to this change is the tailspin that many stock markets and even economies have been in since the outbreak of COVID-19. The additional volatility, the collapse of many share prices and the potential for the collapse of major industries meant that the transmission of data and the development of actionable information has never been more important as companies and their investors remain on edge.
There have been some notable collapses already, as well as some very significant job losses among some of the world’s largest and oldest employers, from J.C. Penney, which filed for bankruptcy only a few weeks ago to Rolls Royce, the UK-based aero-engine maker, announcing 9,000 job losses here in the UK – one-fifth of its workforce. These job losses are just a fraction of the rising count of unemployed professionals across the world. Both indicate a long-term change coming in their respective markets, but from very different starting positions. Few would argue that J.C. Penney, together with many of its bricks-and-mortar peers, has been suffering from the inexorable rise of internet shopping for years. Unable to adapt in a reasonable time frame, the recent bankruptcy announcement will have been a surprise to few.
At the other end of the time scale, Rolls Royce had been flying high on a seemingly unstoppable growth in the flight industry, including cargo, business and leisure. 2019 saw it receive orders for 2,700 engines, producing 600 wide-body plane engines over the year, representing half the world’s fleet, up from a market share of 22 percent a decade ago. Now, with over two-thirds of the world’s aeroplanes grounded and orders for new planes cancelled, its market has not steadily declined like J.C. Penney’s, it has collapsed almost overnight.
While it is hard to imagine the shopping malls with vast department stores returning, it may be easier to expect a recovery in air travel, once the pandemic has subsided. However, few appear to expect that to happen quickly, and even then, it may be significantly smaller than it was before.
The banking industry appears to sit somewhere between these industries. Automation and the rise of technology replacing manual processes have certainly cut the workforce and likely will continue to do so. The retail side has seen the number of physical branches collapse along with the numbers of staff required to run them. The capital markets segment of the banking industry has also had to move with the times, matching long-term trends with increased automation and greater technological efficiency as well as delivering short-term responses to events like the COVID-19 pandemic, shifting workplaces while volatility and throughput soars.
The combination of market stress, falling asset prices and the rising spectre of bad debts, as companies and even whole industries struggle to survive the economic impact of the pandemic, has brought the need to have an enterprise view of your bank’s assets and liabilities into sharp focus. The direction of travel towards an automated real-time view of global positions, assets and exposures has been the same for some time but has now been accelerated as market counterparties realise the need to up their game to insulate themselves from as much contagion risk as they can.
Connecting the dots across the previously divided silos of capital markets banking doesn’t just mean an improvement in margins and returns while minimising risk anymore. It may mean the difference between survival and collapse as the focus on liquidity builds across the markets. Undertaking the significant shift in working practises has been satisfyingly successful for many organisations, my own included, but the longer-term implications for some are vast. The potential failure of industries and major employers, together with unprecedented government debt that must be paid off at some point, will force significant change to the way many people work. My university lecturer’s prediction seems to have come true, slowly over time as expected, but now in a rush, as the world pivots to a new normal, with many employees finding themselves unexpectedly on the job market and looking for their next job, quite possibly in a very different industry altogether.
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