12 minute read 1 Jun 2020
Photographic portrait of a man working from home

How remote working could change financial services

Authors
Niamh Prendergast

EY Global Financial Services Strategic Solutions Leader; Financial Services Sponsor, EY UK Centre For Board Matters

EY Global Financial Services, Strategic Solutions Leader. Likes walking, food and good company. A great admirer of the Arts.

Seema Farazi

Partner, Financial Services, Immigration and Brexit, Ernst and Young LLP; EY EMEIA People Advisory Services COVID-19 Response Leader

Over 20 years' cutting edge immigration law experience. A qualified barrister, who has practised in complex immigration, extradition and public international law cases at all appeal court levels.

12 minute read 1 Jun 2020

Financial services (FS) companies are making an accelerated shift to remote working – what changes will this bring?

People are at the heart of our business at EY. That may have once been seen by some as corporate cliché, but our current reality has underlined the truth behind the sentiment. Sure, numbers, technology and efficiency matter. But they don't matter as much as people do. When leaders’ actions recognize that people are what is most important in business, everything else falls in line. We have seen that across EY, and across Financial Services (FS) in Europe.

Covid-19 has challenged the world and it continues to impact everyone, everywhere. Global workforce exposure is 100% and these are issues that touch life itself, freedom of movement and association, and the health and safety of loved ones. Responses at each stage of this crisis must be informed and built on a clear understanding of impact. This requires thinking holistically about operational continuity considering technology, security, productivity, wellness, and engagement.

Necessity has accelerated change and realigned values and organisations are now faced with the duality of safely transitioning people back to physical locations amid highly controlled and complex regulatory frameworks, while reimagining the future and pivoting accelerated change to transformation.

 

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Chapter 1

An immediate response required us all to be more flexible and human

As we continue to adapt to new ways of working, we discuss what this may mean for financial services.

The debate around remote working has become more relevant across many industries and financial institutions have proved themselves able to make remote work a possibility. The FS industry was often seen as being reluctant to embrace home working, yet in a matter of days it has embraced it and delivered successful remote working at scale with relative technological ease.

We have seen this firsthand at EY. Over the past few weeks our agility, our resilience and our flexibility has enabled us to stay closely connected with clients. Across EMEIA, over 115,000 of us have successfully moved to working virtually. We are now also working across Europe, connecting up local teams by using technology through our EY innovation hubs, where we look to accelerate transformation for our clients by virtually bringing together the right people and equipping them with the mindset and tools they need to reframe and solve their toughest challenges - faster.

An unintended consequence of the lockdown is that we are likely to see firms undergo a much faster digital transformation than originally planned. It has been a huge demonstration of what is possible to do digitally, and that decision making can take days rather than months.

We are starting to see interest from FS companies to adopt this accelerated shift to remote working both as part of a recovery and exit strategy in what will be a challenging economic climate. There is also a wish to pivot these accelerated changes to other priorities such as sustainability, diversity and inclusivity. In the world beyond the crisis, the response to COVID-19 could indeed shape and speed up the transition around these priorities.

It is critical that organizations find ways to connect, motivate and manage their workforce during this challenging period. While it is still early days, here are some thoughts on some of the issues it raises.

More flexible working patterns may help to close the gender pay gap but can it break gender stereotypes?

Financial services still struggles with the gender pay gap as confirmed by the most recent World Economic Forum’s 2020 Global Gender Gap Report which states that gender parity is more than 99.5 years away. It’s obviously too early to know for sure, but with most of the industry remote working, will this be a catalyst for change? On the one hand, this is a wholescale leveling of the playing field - showing society what is possible to achieve through remote and flexible working. This has the potential to challenge long standing cultural barriers around parents with children, or those with caring responsibilities, who are looking for flexibility in their work patterns.

On the other, how level really is this field? We are seeing signs that the lockdown has meant some women continue to do the majority of childcare and homeschooling, regardless of their own work status and pressures. This may reflect the default setting for many that women are the primary childcare providers. It is critical for employers to understand all of the dynamics at play and to spend time supporting working parents, both male and female, who are trying to juggle the extra childcare duties, without the usual support available from family or paid help.

This all comes as FS firms across Europe continue to face specific regulatory requirements on diversity. France demands a 40 per cent quota of women on boards, and German supervisory boards must be 30 per cent female. In the UK, more than 350 FS employers are signatories to the UK Government’s Women in Finance charter, where they set targets for gender diversity.

In the UK gender pay gap reporting has been pushed back in response to COVID-19, a measure that reflects the April deadline for reporting was unrealistic. Yet public and political scrutiny on gender equality will return quickly and firms cannot take their eye off the ball. At EY we continue to set in-year targets to improve the representation of women Partners and are increasing our investment in targeted talent programmes for our female talent. And we are creating a culture where people are helping women in their team gain opportunities to learn and gain new skills and to become aware of how they might unconsciously be limiting women and how to stop those behaviours.

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Chapter 2

Will we see less emphasis on HQs and more on sustainability?

As we start to re-evaluate office footprint and strategy, are we moving towards a more sustainable economy?

As FS firms see what is possible with remote working, executives are starting to re-evaluate their office footprint and strategy. We have already seen some firms exploring a de-centralised approach to staff working, looking at using satellite offices rather than relying on big corporate headquarters. This could mean cheaper rents, less commuting time for staff and would fit in with many governments aims to spread out growth and jobs from established financial centres. One to watch but maybe this will be the start of the end of the large physical corporate headquarters?

COVID-19 has led to huge emissions reductions across the globe, most significantly in places where industries have paused. FS firms will also have seen a dramatic decrease in their carbon footprint, as offices closed and business travel fell to zero almost overnight. In its place, technology has shown what is possible in the modern global workplace. There is a certain irony in this given the focus on sustainability in financial services. It was one of the main topics at Davos at the start of the year and one of the key board concerns as we found in the latest EY CEO Imperative Study.

It will be fascinating to see how FS firms respond once the pandemic restrictions are eased. Will this re energize the sector in recognizing its importance in helping finance the transition to a lower carbon economy? FS is obviously not a high carbon producing sector, especially in comparison to other sectors such as transport, energy, aviation etc. That said, it does have a key role to play in influencing spending and investment decisions that will allow for a greener future.

The importance of sustainable finance will not be diluted by the response to COVID-19. On the contrary, the pandemic has given an insight not only into what the realization of what a black swan global risk looks and feels like, but what is achievable in sustainability in a relatively short period.

In 2017 EY joined forces with the Coalition for Inclusive Capitalism to create the Embankment Project for Inclusive Capitalism (EPIC). EPIC brought leaders from across business, government and civil society together to help make capitalism more sustainable and inclusive. Their overarching goal was to develop new, more holistic metrics to measure long-term value to financial markets. This continues to be critical.

The FS industry has also shown in the last few weeks how seriously it takes its role in society – the lower profile ‘S’ in ESG (Environmental, Social and Governance). Banks are playing their role as a vital part of transmitting the stimulus packages announced to the real economy – to individuals, SMEs and large corporates. Many FS firms have also made large donations of cash or support to communities impacted. Hopefully playing a key role in the recovery will build trust back into the industry.

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Chapter 3

Running a business with a greater focus on wellbeing & mental health

While much of the initial reaction around the use of remote working has been positive, it won’t all be good news.

As well as the obvious fears and worries directly linked to the pandemic, employers will have to understand some of the wellbeing issues arising from a continued period of home working. The change management process of “going remote” may seem simple, but if not managed properly can result in stress and mental health concerns - not least as this was an enforced situation, which some people may find challenging and which everyone is handling through their own unique lens of personal circumstances.

For many, there could be no separation between work and home life; our offices are our homes, and our homes are our offices. How do we help minimize anxiety and promote well-being for the health and productivity of teams as we ‘settle in for the long-run’?

At EY we have made sure that our people are regularly checking in and have full access to information and online communities to help with a range of possible issues such as homeschooling or balancing work. That help comes via webcasts and virtual interaction from leadership but also through encouraging teams and colleagues to “socialize” where they can – and it’s been great to see people have virtual coffees and quizzes online, and use freed up travel time for well-being.

Another challenge for firms how they performance review peoples’ work and progress under the current situation. Leaders are constantly trying to ensure their review systems take into account a wide variety of personality types and ways of working. Yet with remote working that becomes much trickier. For example, the introvert who only explains their successes in a face-to-face informal chat may not be so forthcoming on a video chat.

As well as mental health challenges, there is also a physical toll from extended remote working. Many people will have quickly improvised workstations at home. We know, for example, many call centre staff have resumed work from home. Yet, there may be health and safety issues without the right guidance and equipment for sustained home working.

FS firms will also have to deal with possible issues when we all return to offices, commuting and “normal life”. Some may be very keen to return but others may find the transition challenging. The FS industry, more than most other parts of the economy, is extremely globally mobile. Will the embrace of virtual enablement impact cross-border travel for meetings? And for those working in FS, we could see a reluctance to be mobile, as they may wish to stay near family as the world recovers in the next few years.

A nimble approach to talent management

The speed of the pandemic also raises a few questions on the right tools for people management. The somewhat disjointed structure where different functions such as HR, talent and recruitment look after different aspects of people has been common in many big corporates. When an emergency hits, not having a single point with oversight of all people can be a real weakness. Dealing with the global lockdown will have been an eye-opener for many firms over the lack of central co-ordination and control and the need to have a much more integrated approach to global workforce planning.

However, our experience during the last couple of weeks has made us feel more optimistic overall, as we have seen:

  • the value of remote and flexible work options, which also has an added talent attraction benefit
  • how important it is to build trust with a remote workforce
  • how separating work and home needs to be carefully planned and carried through
  • how it’s even more important for teams to communicate effectively
  • the importance of leaders to cultivate a positive culture

Reflections for the future

It is of course difficult right now to predict the medical and macroeconomic outcomes of the current crisis, but we are already witnessing a profound impact on global and multinational companies. One that impacts their people, ways of working and society.

There will be critical learnings we can take away from the crisis, not just for the FS industry but for the way we live and work together on a more sustainable level. To go back to where we started - that this crisis has impacted everyone, everywhere - we see the momentum that will drive us towards a new working world.

Values have emerged that will drive not only how we steer our people through this crisis but how we bring them out; values that will help us protect culture and loyalty, as well as giving us the engagement opportunities to come out with a more resilient workforce and a better working world.

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Summary

Dealing with the global lockdown will have been an eye-opener for many Financial Service firms impacting their people, ways of working and society. There will be critical learnings we can take away from the crisis, not just for the FS industry but for the way we live and work together on a more sustainable level.

About this article

Authors
Niamh Prendergast

EY Global Financial Services Strategic Solutions Leader; Financial Services Sponsor, EY UK Centre For Board Matters

EY Global Financial Services, Strategic Solutions Leader. Likes walking, food and good company. A great admirer of the Arts.

Seema Farazi

Partner, Financial Services, Immigration and Brexit, Ernst and Young LLP; EY EMEIA People Advisory Services COVID-19 Response Leader

Over 20 years' cutting edge immigration law experience. A qualified barrister, who has practised in complex immigration, extradition and public international law cases at all appeal court levels.