One of my favourite crisis management quotes is “when the boat starts taking on water; don’t jump overboard…grab a bucket!” It’s an apt mantra for this difficult period the industry has gone through, when the financial services sector as a whole – much like the rest of the world – started taking on water. Everyone moved to remote working, rolling out business continuity plans (few of which ever were predicated on this exact scenario), contesting with market volatility and setting up intellectual book shelves for video call backgrounds. But as our Summer Issue highlights, asset servicing providers grabbed their metaphorical buckets and helped steady the ship.
Whether it was taking on further outsourcing requirements from clients, adapting to unforeseen circumstances or simply just being a reliable partner through the eye of the storm, as I wrote in the feature Lean on Us, custodians fulfilled their role as a fortress of safety. Prime brokers, fund administrators and all kinds of asset servicers alike seemed to adapt seamlessly and may reap the rewards of their efforts down the line.
This positive sentiment I’d gathered from interviews and catch-ups over the last few months with asset servicers and their clients was backed-up through research from PwC in June as well. According to interviews conducted by the consultancy giant with asset servicing CEOs and COOs from the likes of BNP Paribas Securities Services, CACEIS, HSBC, Mizuho Trust and Banking and State Street, among others, the respondents said their businesses were able to adapt extremely quickly to the new form of working from home, while being able to minimise the impact on clients.
In the paper, CEOs explained that the pandemic sparked new attitudes towards business processes, where decision making became quicker and more agile to cope with the new operating model. “Comments like ‘80% is good enough’ and ‘just do it’ became the new mantra, and a recognition that agility, trust, experience and being ‘bold’ are necessary styles of leadership and decision making in such extreme circumstances,” the paper said.
The paper said many CEOs reported their staff feel more empowered and trust to take on change projects, which is a great development at a time where a personnel shift to other sectors has been much talked about. The paper explained senior leaders should take important lessons from this experience to get the most out of staff in a way that enriches their role, motivates performance, and collectively resulting in a massive positive cultural shift within the firm.
The optimism I felt speaking to industry players at the start of, and during the crisis, was unmistakable, as was the confidence in being able to deliver their services uninterrupted. This has carried through to the calmer seas in which we all sail now.
Spirits are raising – as felt in conversations and seen through the digital networking at industry events, something we at Global Custodian are looking forward to delivering on 3 September for our annual awards also. There is optimism around ESG investing after strategies linked to the practiced soared during the market turbulence and the pandemic highlighted – yet again – the fragility of our planet. Furthermore, we’re starting to see some real traction for technology innovation projects again as the initial transition period of adjusting to remote working and business continuity plans becomes the new normal and the focus shifts back to the future.
If this crisis didn’t make the benefits of automation abundantly clear, then I’m not sure what will. The adoption rates of cloud technology along with distributed ledger technology, machine learning and artificial intelligence should be set for a boom after many firms had to shelve these developments in favour of more prudent stabilisation attempts during this period of unprecedented challenges.
The industry has turned back to new products and offerings very quickly whether its ETF servicing or bolstering front-to-back capabilities – again covered in our Summer Issue – while few seem deterred in their hiring sprees by the crisis with our people moves section flourishing. So, while we’re not out of the woods yet, it’s safe to say that we are getting on track when it comes to industry-wide improvements and innovation, and we’re doing so – if I’m not mistaken – with a collective smile.