Nostalgia for the 90’s runs far beyond just fashion, TV and games. It has spread into business too. Many banking and hedge fund managers look back fondly to a time when business was more about personal relationships and simple investment strategies and less about regulators and efficient operating infrastructures.
But, as businesses evolve, so too do their processes. Managers are looking at their middle-office functions with fresh eyes, seeing them as largely untapped sources of value.
Data and the middle office revolution
Nostalgia can only take us so far. The reality is that all businesses need to find new ways of working harder and faster. The middle office has the potential to add this extra value.
The growing demand for more consistent, accurate and timely data has meant the middle office is seeing a sharp rise in the volume of data passing through it. According to estimates by PwC, assets under management will rise from $63.9 trillion in 2014 to more than $100 trillion by 2020.1
As a result, the middle office is undergoing a major evolution, as managers work to unlock the secrets of greater competitiveness, efficiency and insight.
Trends in trade processing
The trade processing cycle is being affected from all angles, not least because investors are having to deal with the impact of an expanding international community. Trading across different time zones is far easier than it was a decade ago, with global settlement cycles more standardized and operating more efficiently.
Equally, we are seeing closer relationships between investors and their regulators, government agencies and industry standards bodies. All parties are working together to develop an international set of best practices. If finance is reliant on information, and information is reliant on the efficiency of the mechanisms designed to deliver it from one party to the next, these improvements in the trade processing cycle are vital to middle-office success.
Consolidate and converge
Within the industry, there is an increasing emphasis on consolidation and convergence. However, technology is at the heart of this and the pressure for businesses to stay uber-efficient and automated is placing increasing pressure on technological capabilities.
The expectation is that in the future, a trade will be able to pass from the buy-side to the depository through automation alone. For this to happen, we need the right technology – technology that is robust, cohesive and that links the industry’s firms, systems and depository linkages. And for that, crystal clear communication is key.
Rules and regulations
It’s the job of the regulators to ensure that best practices and standards are put into practice and enforced. Not easy in a world that seems to shunning the idea of a global village in favor of a more inward-looking mindset.
The Canada-EU trade partnership seems plagued with obstacles and disagreements, while the Brexit vote is symptomatic of the idea that we are not all in it together. Closer to home, the US election result has shocked the world and raised countless questions about the future.
Regulators looking to create cohesion through multiple parties working as one have got their work cut out. How do you achieve standardization when the balance has tipped from working together with external parties towards a sense of nationalism and self-sufficiency?
Talent gets technical
For many years, working for one of the big-name investment banks has been the ultimate career aim. However, with these banks facing an increasingly regulatory atmosphere, those looking for their dream job are now pausing to weigh up their options.
A swathe of smaller, more flexible trading firms – driven by technology – are responding more quickly to market changes and global events. In the process, they have become more appealing to candidates, especially millennials. This means candidates are doing everything they can to demonstrate they have both the technical skillset (data analytics and blockchain experience, for example) and the ability to apply that knowledge to a constantly evolving financial landscape.
Getting a foot in the door at these firms has become increasingly difficult - an Ivy League college might look great on a CV, but when it comes to the middle office a candidate with an ever-changing hybrid set of skills will be the one that shines the brightest.
Financial services now require a more diverse skillset within the middle office – individuals who can work just as closely with revenue and the markets as they can with technology and systems.
If you’re looking for top talent in this space, Selby Jennings can help. We are specialists in recruitment for the financial services industry and our unrivalled knowledge of niche areas – such as middle office – means we can deliver the expertise required to meet your requirements. Call the team today for more information.