Could there be a permanent remote working shift for the financial services industry?

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Could there be a permanent remote working shift for the financial services industry?

A recent survey from Financial News found that two thirds of city bankers don’t want to return to the office full time when the current pandemic ends. Since March, the financial world, like much of the population, has been thrust into home working but are we looking at a permanent shift towards a remote workforce as the new normal takes hold? And if so, what are the implications for the financial services industry – a sector mired in regulation and compliance directives.

Aside from the obvious challenges which face all industries, such as setting up offices to maintain social distancing, hygiene and antibody testing, what are the specific obstacles face the financial services industry?

Staying in touch and collaboration

The flow of information that comes from face to face interaction is one concern about home working for many financial services workers. Traders rely on a constant flow of information, and that environment is difficult to replicate at home even with the current array of videoconferencing tools. The lack of available turrets and potential compliance concerns mean that traders might be some of the first to reprise office-based roles. 

Fulfilling regulatory obligations

Financial services firms still need to adhere to strict regulatory and compliance regimes even in a remote working environment and traders come under scrutiny because of the increased risk of market abuse. Last month, Big Four firm, PWC, announced it was developing facial recognition technology that would log when home working employees were away from their computers. The plans have come under fire though and many experts have described it as an infringement of privacy so there is a fine line to walk between maintaining compliance requirements and respecting the rights of remote workers.

PWC defended the need for the technology, pointing out that the Financial Conduct Authority has recently reiterated its stance on risk and remote working. The regulator has expressed concerns about how remote working could lead to a greater opportunity for market abuse in its May newsletter, and it has stressed the importance of making sure homeworkers who are accessing insider information are supervised remotely.

It has also emphasised that firms need to be particularly vigilant that they have controls in place to monitor market soundings and personal account dealing when staff are working from home.

The UK regulator has made some allowances for remote working in the medium to long term though, conceding that some of the key client verification procedures and recording of calls will be more difficult, but it has always maintained that financial services firms must maintain the relevant information to make filings as soon as reasonably possible. The FCA also confirmed this week that it would push back the Senior Managers Certification Regime deadline, which requires non-senior managers who have a significant impact on customers to be certified annually, by four months.

Visio-conference

Maintaining customer confidentiality

Client onboarding, protecting customer data and handling cheques and money all present significant challenges when it comes to remote working. Many firms traditionally had strict policies about keeping documentation within the office and how to handle cheques, which has obviously had to be circumvented since March. Realistically, even the most digitally advanced firms will still need a presence in the office to protect client confidentiality but whether that presence needs to be as large as it was before is debatable.

In terms of confidentiality and GDPR, financial services firms should have been up to speed long before Covid-19 hit. The record number of GDPR fines in the financial services industry last year though, suggests that this was not the reality, however, so an unexpected upside of the pandemic could be that it speeds up digital transformation within the sector. A recent survey from the Financial Services Information Sharing and Analysis Center backs this up, finding that 46 per cent of its respondents report that their financial institution is likely to invest more in cybersecurity post-pandemic.

The benefits of ‘blended’ working

Clearly, there is no one-size-fits-all proposition for the financial services industry – some roles will be easier to fulfil remotely, while remaining compliant than others. According to recent research from Deloitte, industry leaders have suggested they may consider remote working on a permanent basis for between 30 to 35 per cent of their workforce. What roles those will be is unclear but obviously it is much easier for personnel in marketing, for example, to continue to work from home than it is for traders. 

Despite the complications, it does look like the tide is turning in favour of a more blended working mix, even within heavily regulated industries. A recent study from PWC found that while pre-Covid-19, only 29 per cent of financial services firms had at least 60 per cent of their workforce working from home at least once a week, post-pandemic 69 per cent think that statistic will hold firm. While there are some operational and regulatory challenges industry sentiment seems to suggest that this could lead to greater job satisfaction, the potential to address diversity imbalance as flexible working attracts more female employees and of course the undeniable benefit for firms that they could cut costs in terms of prime retail floorspace.

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