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Covid-19 Spurs Innovation

Harpal Sandhu, founder and chief executive of fintech Integral, said financial services firms will now be receptive to how cloud computing can change their business models as the need for remote working has demonstrated the effectiveness of the technology.

Harpal Sandhu, Integral

Sandhu told Markets Media: “There has been a realisation that the cloud is really powerful and firms have had to overcome their inertia. Covid-19 has forced people to make changes in their behaviour which would have taken years.”

For example, Integral has one client who built their IT in-house for decades but then asked how fast they could move to the cloud.

“They found there was a huge opportunity cost when volatility spiked in March as competitors who had already moved to the cloud were immediately able to service clients more efficiently,” Sandhu added.

He continued that financial firms have realised they do not need an expensive IT department to maintain their current footprint and can also increase their flexibility.

After the crisis he expects that, when restrictions on movement are lifted, staff are unlikely to go back to offices in mass. For example, teams could be broken up with staff taking turns to go into the office as cloud computing allows them to work seamlessly between the office and home.

“My biggest prediction is not only that working from home will stay, but additionally staff will be able to work from remote locations where real estate is cheaper,” Sandhu added.

He predicts there will be innovation both internally within firms and externally.

“Everyone is going to dust off their examples of how cloud can fundamentally change businesses and the audience will now be fantastically receptive, added Sandhu. “There will BC and AC eras – before Covid-19 and after Covid-19.

For example, Integral has provided cloud technology in foreign exchange that is delivered through web drivers and allows monitoring of risks in real-time.

TrueFX, a spot trading FX facility for the buy side, is centrally cleared by Jefferies FX prime brokerage. This month the first trades were completed on the platform by FXCM, AxiCorp, Velocity Trade and leading electronic market makers.

Brendan Callan, chief executive of Forex Capital Markets (FXCM) said in a statement: “TrueFX is an exciting and innovative proposition that allows more market participants to connect and trade with the widest range of counterparties. By eliminating credit as a barrier to market, many can access core FX liquidity far more efficiently than ever before.”

Post-trade innovation

James Maxfield, managing director at Ascendant Strategy, a post-trade consultancy in capital markets, said in a blog for ipushpull that the coronavirus crisis could provide a catalyst for change.

For example, leaders have seen the benefit of digital communication with their teams.

“Ascendant Strategy spoke with the client service head in the markets division of a bank who was delighted with how Zoom was able to connect him with his teams,” added Maxwell. “They have now seen what is possible in terms of communication mechanisms such as Symphony, Slack and Microsoft Teams. And they like it.”

He continued that traditional approaches to crisis management, with key people huddled together in a war room, no longer works.

“However, this is already showing itself as being unsustainable during this extended lock down period – anecdotally, fails and collateral management are key pain points within the industry right now – highlighting the lack of standardised processes and pinch-points within many post trade processes that cause them to lack scale in stressed situations,” wrote Maxwell.

As a result, the digitisation of post-trade processes will accelerate.

“The change is already happening with, for example, firms like ipushpull offering real-time workflow apps and notifications and as a service across multiple channels including chat applications,” he said.

Change in gender balance

Consultancy Oliver Wyman said in a blog that the Covid-19 crisis has shown that diversity of thought is crucial as some of most effective responses have come from countries with female leaders -Iceland, Taiwan, Germany, New Zealand, Finland, and Denmark.

“This should underline to financial services companies that diversity in their own COVID-19 response teams is not just nice-to-have, but essential,” said Oliver Wyman. “They must recognise the importance of cultivating a broader range of perspectives and ways of thinking in how they deal with crises.”

The consultancy continued that the crisis has also demonstrated that financial services companies can operate remotely, even in trading. As a result financial services companies can embed flexible working practices to attract more diverse employee.

“The flexibility remote working brings will reduce the need for ambitious employees to make sacrifices in their personal lives in order to reach leadership roles,” added the blog. “Both these outcomes will significantly benefit women and improve the gender balance in financial services.”