ANYTIME, ANYWHERE: AGILE WORKING ON THE BUYSIDE.

Louise Rowland looks at the opportunities and challenges of the new working normal.If the past six months have taught business anything, it’s that necessity is the mother of invention. Back in February, who would have believed that the world’s largest financial institutions could have some 90% of their staff working from home within a matter of days – reinventing their entire operating model in the process?

Half a year on, that dizzying overnight shift to remote working seems to have changed everything. While some organisations are now taking cautious steps to put staff back into their physical premises, other big hitters such as Google, Facebook, NatWest Group and Standard Life Aberdeen are happy for their employees to continue to work from home until 2021.

All the signs are that agile working will take centre stage as we head into the New Normal. So how far is the buyside buying in?

More than just ‘WFH’
Agile working isn’t just about clunky acronyms to describe connecting with your colleagues from your kitchen. It’s an entire methodology, centred on efficiency, performance and quality of delivery. It’s less about where and when teams and employees work, and more about what and how they do so.

Advocates argue that it fosters collaboration, reduces costs, increases productivity, helps talent blossom and spurs innovation and creativity. Yet it is only relatively recently that much of the asset and wealth management sector have started to appreciate these benefits, with Covid-19 and the need to work remotely accelerating the whole process.

Grappling with the risk
The shift, however, isn’t without its challenges – particularly as buyside firms also face increased unpredictability and market volatility, higher volumes of trading and more complex regulations and in-depth reporting requirements.

The crisis has brought an intensified focus on risk and resilience. Firms now need a robust framework around WFH for an extended period of time, says Paddy Lewis, wealth management partner at global financial services specialists Sionic. “Risk function and compliance must have been looking at this situation through gritted teeth and thinking ‘will this be ok?’,” he adds. “I’ve worked for 30 years with people on the floor and identifying and spotting risks and risky behaviour has always been largely physical. Now all this data is going down what’s often a cheap piece of wire into people’s homes. That’s why we’ve seen the ramping up of compliance activities over the past few months.”

Simon Turner, wealth and asset management risk & regulatory leader at EY, agrees. “Ahead of the crisis, asset management firms will have stress-tested their businesses to withstand plausible severe scenarios as part of broader regulatory requirements in place across the financial services sector,” he says. “Yet, even undertaking the most extreme stress-testing, many firms may not have modelled the scale of the crisis – a flock of black swans events.”

He notes that “business continuity protocols went from testing a plan on a page to implementation at breakneck speeds. Over the past six months, it has been critical for firms to consolidate their processes around key business functions.”

Technology to the rescue
The crisis has shown the art of the possible. It has also shown that fragmented, complex operating models are no longer fit for purpose, explains Marc Schröter, head of global product management at SimCorp, a leading provider of integrated investment management solutions.

He says, “A front-to-back office, multi-asset platform approach is critical because it enables investment managers to quickly adapt to changes in investment strategy. It allows firms to provide real-time, accurate and accessible data to support the entire investment lifecycle, whatever the investment strategy, and ensure that new asset classes can be onboarded in a timely fashion.”

Small is beautiful
Creating a ‘composable enterprise’, based on micro-applications, can be a central factor in agile working, helping deliver innovation faster and adapt applications dynamically, says James Wooster, chief operating officer at software and services business Glue42.

“Covid-19 and remote working have been a double whammy negative for firms. People have been working at home on less powerful machines, with just one screen and their desktop crowded with Zoom, Team Meetings, chat, email, telephone, gamification applications and so on,” he adds. “Whereas in the office, employees might have been using 15 apps and four screens, they now can have 20 apps on one screen. There needs to be a complete review of the workflows and ways of simplifying the user experience.”

Wooster notes that smaller business apps can be composed and recomposed easily, making it far easier to introduce changes to IT and desktop applications, creating greater efficiency in the user and business workflow.” If there’s any silver lining from Covid, it’s around what organisations are now doing on both the buyside and the sellside to become more agile. They’ve been forced to move faster than they were planning to,” he says.

Playing catch-up
Not all firms were coming out of the starting blocks back in March at the same speed, says Russell Dinnage, head of the capital markets intelligence practice at GreySpark Partners. “Large-by-AUM buyside firms are technologically adept and are making major investments in automation and digitisation, especially over the past five years, in terms of both internal workflows and processes and also external interaction with markets and clients,” he adds. “Small-by-AUM firms, on the other hand, are still often playing catch-up in those areas in terms of automation or digitalisation efforts.”

“The level of technical sophistication is still relatively low in small-by-AUM asset managers or wealth management firms, with many activities still inherently manual. That’s increasingly challenging from an operational perspective because of the extent to which the markets where those firms typically generate meaningful returns on an annual basis are increasingly electronified. If those types of smaller firms are now working in an agile manner, what kind of data management strategies or policies do they have in place? With most buyside firms of all sizes now only allowing their staff to go into the office two or three days per week, smaller buyside firms will have no choice but to adapt to automation in their trading activities, specifically. Doing so may already have been on their long-term roadmap, but they now need to overcome the challenges much faster or it will have serious repercussions for the viability of their business models in the future.”

The human touch
The shift to WFH has been a fast-forward evolutionary process, where the human impact is not yet fully understood, particularly on younger employees. Sitting in front of Zoom meetings all day can’t replicate meeting, interacting – or sharing a joke – face to face.

“If we were just machines and could exist with a laptop, a fridge and a bed, that would be fine. But we’re social animals, in need of human interaction,” says Lewis. “Only 7% of our communication is in verbal form and the rest is body language, which is why office life has evolved into its current form. On top of that, there’s also anxiety with WFH over whether we’ll lose the ability to create strong cohesive teams, which would get in the way of business growth.”

Implementing successful agile working has to be about cultural change rather than mere cosmetic lip-service. Firms need a full agile playbook, according to Kevin O’Shaugnessey, head of digital at asset management consultancy Alpha FMC. That should cover all aspects of structure, roles, events and artefacts, moving on from ‘project teams doing agile’ to a proper continuous delivery pipeline.

“Educating senior leaders on their role and how they will now work differently with teams is an important aspect of this, as is how prioritisation and funding works. Equally, recognising the cultural change that agile working will necessitate is a big part of success.”

©BestExecution 2020

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