Banking has traditionally been considered a high-touch industry based on relationships and human interaction. Investment bankers normally jet around the globe for face-to-face meetings, where million- and billion-dollar deals are made based on gut instinct, trust, and reputation as much as on financial analysis. Trading, too, was long seen as a relationship game. Even as some asset classes electronify, the $128-trillion-dollar world of bonds has been particularly slow to go digital.
But COVID-19 put a freeze on all this in-person interaction. In the span of days, Wall Street and City of London firms shut their doors, with the majority of employees made to work from home. Suddenly, bankers were doing deals from their kitchen tables, while traders got to skip the commute before their notoriously early-morning starts.
Rather than business careening to a halt, however, things carried on smoothly. Balance sheets held firm. Deals got done. By April, Morgan Stanley CEO James Gorman said his bank had proven it could "operate with no footprint" and would require "much less real estate," going forward. Others made similar comments, reporting better-than-expected earnings and signalling they could implement permanent flexible working structures.
So how did these massive, global institutions pull it off? Many of this year's Transformers lead innovative strategies that came to the rescue for the world's biggest banks.
In traditional investment banking, UBS' head of investment bank technology, Zoe Evans, is leading a new way of working through the bank's "hybrid pod" model a cross-functional business model designed to enhance collaboration.
Instead of the traditional, "waterfall" method of organization, hybrid pods are self-organizing teams made up of 4 to 9 people with different competencies, directly connected to their business purposes via dedicated product managers, that execute a clearly-defined digital book of work. The bank says the shared-ownership model reduces lead time and increases the quality of work delivered. And, according to Evans, it worked well during the pandemic.
"New hybrid pods were formed to build solutions for traders to work from home, delivering a solution within days," she told Business Insider. "The challenge is that, to implement hybrid pods, we need to move away from traditional methods of structuring and funding teams that have been in place for decades [and] not everyone is open to change."
So far, the transformation affects 6,000 employees around the world.
Evans is also leading the migration of apps to the cloud, as well as transitioning all engineers onto the investment bank's newly-launched developer platform on the cloud. She said the pandemic has been a "clear reminder" of the importance of having stable, secure, and scalable platforms.
"The most significant change that is going to shape the future of the investment bank...is the way our bank is transforming to become truly digital," she said. "To do this we had to change the way we work."
When it comes to sales and trading divisionsoften the global banks' largest businessesdigitization has been particularly slow in the fixed income department. But some of this year's Transformers have been making inroads there too.
JPMorgan's Chi Nzelu runs eCommerce for macro products out of the bank's London office. He is responsible for all electronic trading for foreign exchange, commodities, and interest rates markets, as well as for driving the execution component of the firmwide digital markets strategy.
Nzelu helped build JPMorgan's institutional currency trading franchise one of the largest on the Street through automation, research, and machine learning techniques. He was also integral in JPMorgan's mobile trading efforts, which proved particularly useful when lockdowns swept the globe forcing people to work from home.
"Evolution is happening all around us, and in finance, the last 40 years has been unprecedented in that respect," Nzelu said. "Trading has evolved at warp speed since the 1980s and my job is to form a path to the future of trading."
At Citigroup, Alaa Saeed is also working to electronify fixed income trading. Saeedthe global head of electronic platforms and distribution at CitiFXis responsible for the design, development, and distribution of Citi's foreign exchange and local markets capabilities, electronically.
He also spearheaded the development of Citi Velocity, a flagship proprietary trading platform that "basically kept clients going during the pandemic," according to a spokesperson, who said "the mobile trading app usage shot up when we were in the thick of it."
The Citi Velocity platform allowed clients to continue trading amid volatile markets with minimal interruption throughout the network. In the peak weeks of the pandemic in the spring, usage of Citi Velocity hit double-digit growth, and client mobile hits increased 138% year-over-year, according to the bank.
Saeed said his biggest challengeand opportunityis "dealing with the increasing complexity associated with the fragmentation of FX liquidity, and the proliferation of connectivity providers and platforms."
"Our work simplifies the electronic platforms landscape and sets out common standards and criteria to benchmark comparable offerings and performance," he said.
The pandemic also necessitated innovation in retail banking, and Starling Bank founder and CEO Anne Boden another one of this year's Transformers responded to the crisis quickly.
In April, Starling launched the Connected Card, a secondary debit card designed for people who are self-isolating and need others to handle their shopping. It is controlled by the Starling app and has its own PIN and other security blocks. The bank also launched a check-imaging service, allowing customers to skip the in-person hassle of mailing checks and process them remotely using the app instead.
For small business owners, freelancers, and contractors, Starling launched a business toolkit complete with an invoice generator, VAT calculator, and self-employment tax estimator. It also launched a US dollar account for small businesses, and has lent some 1.5 billion to small businesses under UK government-backed pandemic-recovery schemes.
"When I launched Starling in 2014, I wanted to change banking in the way that Amazon changed shopping and iTunes changed music," Boden told Business Insider. "I hope that Starling can give people a fairer, smarter, and more human alternative to the banks of the past."
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