While financial services employees have been heading back to their ‘desks’, firms are figuring out the governance, structural and cost realities of what it means to reopen Covid-safe offices. Some banks are introducing staff rotation models, others have publicly stated they do not mandate a return to the workplace for many months to come. Whatever the corporate preference, working from home will dominate into the budget season, the 2021 priority-setting season, and throughout the final calendar quarter of 2021.
If we have learned anything over the summer, the Covid-19 risk is not diminishing, let alone going away any time soon. Non-industry events such as changes in international travel lists and test & trace programmes can quarantine staff almost overnight. Firms are having to adapt and change, and ‘business as usual’ requires agility and flex like never before. But the everyday operational challenges never change. Firms need to extract every possible ounce of operational efficiency throughout this extremely challenging economic climate which will pare back already stretched budgets, and at a time when firms still need to innovate and compete.
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As CTOs are acutely aware, remote working arrangements bring their own governance, legal and compliance challenges. In fact, ‘return to work’ means a whole load of extra work for technology departments. Not only do firms have to maintain their Business as Usual (BAU) policies and procedures, but now they must accommodate new working models, update their business continuity plans (BCP), all the while revising budget and resource allocations to build in flexibility for the uncertain path ahead. How can they do it all, with less?
Top CTO challenges and priorities
From our discussions with hundreds of CTOs across the industry and the globe, we consistently hear three key areas of concern:
1. From BCP to BAU
The Covid pandemic has exposed an over-reliance on End User Computing (EUC) models. EUC models (usually developed as Excel spreadsheets) have been created by bank employees as a workaround to navigate the limited bandwidth of the IT department. In a highly regulated environment, these systems present huge risks to organisations, in many cases falling short of governance, risk and compliance standards. In most cases they operate outside the direct control of the firm’s risk or model validation teams, and many financial firms have no clear idea of the extent to which they are dependent on EUCs, leaving them exposed to high levels of operational risk. To make matters even worse in these remote working conditions, most of these EUCs have not been created, nor lend themselves well to being accessed and operated remotely, so sorting this headache has emerged as a top priority. If it’s helpful, we published a whitepaper on this very topic, which you can access here.
2. Change programmes
Every CTO tells us that the digital transformation and change management programmes designed to address the relentless regulatory, competitor, innovation and customer challenges must go ahead as planned, regardless of the pandemic. You may be tackling automating end-to-end electronic trading workflows or creating mobile framework applications. Whatever the focus, hampering the journey towards electronification, firms stumble over the limitations of legacy systems; trading desks still depend on quotes, orders and trades are processed from a multitude of external trading platforms, and inconsistency, lag and gaps all result in costly errors, which are missed opportunities at best, and regulatory reporting breaches and huge fines at worst. In the quest for efficiencies, mitigation of risk, and achieving seamless and future-proofed IT architecture, firms must automate to meet their regulatory obligations and deliver client, management and regulatory transparency.
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And this hasn’t even touched on achieving an ambition to create end-to-end, freely flowing models of perfectly clean, ordered and well-governed data. Every CTO needs to apply extraction and visualisation layers, and mine the data for valuable insights that can be fed further upstream. There is no hope of improving and ultimately optimising the investment decision making, execution and post-trade performance if firms cannot address this challenge. While automation and data cleanliness may seem a straightforward ambition, CTOs are seeking fresh ideas to accelerate their ability to sort this out.
3. Setting workable and flexible budgets
Lockdown has meant that organisations have had to redefine traditional definitions of the term ‘flexibility’. Just as they are addressing their technical and transformational challenges above, the way budgets are defined and set have to reflect this new reality. Historically, budget season set fixed budgets once a year. Once fixed, they were pretty immovable, and CTOs were measured against the return on these pre-assigned pots. Today, it is encouraging to see more and more CTOs introduce more flexible models. Those ahead of the curve have been winning the game this year, and CTOs who used this approach last year have thrived throughout this pandemic. They are already talking to us about how to build even more extensibility into their 2020 budgets for the best fighting chance of being able to achieve all their objectives in the year ahead.
How low-code can help
Whether you are trying to uncover and sort out your EUC mess, considering how to deliver huge enterprise-wide transformation programmes and/or how to best set and flex your budgets, we are seeing a huge growth in the appreciation of low-code application platforms (LCAP). Time and again, we are called upon to deliver faster applications and EUC adjustments, return greater investment, and to mitigate and plan for the unknown further down the track.
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A new generation of LCAP, fit for the financial markets, can dramatically reduce the code needed – and therefore the time and cost to develop new applications for the financial services industry:
● In terms of replacing EUCs, bank IT departments can now develop compliant and cost-effective applications. Firms have to be strategic about which EUC solutions or market sectors they need to “clean up” first. Some may be easy to adjust, others may need new complex models. Whatever the requirements, the low-code approach means that firms can build solutions up to 80% faster than standard development time for a fraction of the cost, meaning CTOs [and operational professionals] can quickly eliminate the risky and inefficient EUC inadequacies from their firms and plug the ever emerging risk gaps.
● Every ambitious CTO can deliver their key innovation priorities and accelerate their digitisation and transformation programmes across the firm. Imagine what you could achieve, and at a fraction of the pace and cost? Imagine the workflow efficiencies, let alone the cost reduction potential this can present month by month, quarter by quarter, individually and in aggregate across the firm, even the industry?
● Every CTO needs to set budgets in a much more flexible way. Change costs are incremental; you could be bounced with a programme of wholesale change at a drop of a hat, and the ultimate question is always: “How can I do more, with less, without compromising quality?” Not all objectives will be clear at the outset of the journey, and only LCAP offers a viable and cost-efficient way to attain that flexibility. By using less code, firms can ultimately achieve more, and do more differently. LCAP delivers a more disposable budget line and, I would argue, more flexibility than ever before.
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Smart CTOs are tooling up for a tough road ahead
To say that Covid-19 is a major test of the operational resilience and business continuity arrangements of financial services firms is a major understatement. CTOs have had to extract more from their budgets than ever before, and they need to tool up for tough times ahead. We have been inundated with requests by CTOs who recognise how low-code application platforms can provide a (not so) secret weapon in a CTO’s arsenal. Of utmost importance is making sure that the application platform is fit for the financial markets.
Automate and digitise to meet client demand, remove repetitive workflows and processes; extract operating efficiency and reduce cost; increase or plug eroding margins; innovate, outperform and deliver faster are the daily demands placed on bank CTO desks, wherever they may physically find themselves. Where the appetite and appreciation for cloud-enabled software tools paved the way for speed, low-code applications are the next evolution that will transform the industry and ensure that it can meet the challenging times ahead, this year and next.
