By Davy Barthes, CEO, Magen Financial
The institutional brokerage business has been around for almost a century and has played a vital role in the development and growth of the global financial services industry. But the essential ways that brokerage firms work have slightly evolved since almost the inception of the business – they still rely on personal relationships, face-to-face engagement, an existing broad understanding of how the industry works, and a certain detachment towards emerging technology to improve operations.
However, COVID-19 has taken the old ways of working completely off the table for brokers. In-person networking and client dinners have not been viable for the past year, and are unlikely to quickly return in any meaningful way, even as cities slowly begin to reopen. Now, firms must incorporate the “new normal” that was established in 2020 – flexible, work-from-anywhere arrangements – into their long-term plans, giving brokerage firms an easy excuse to embrace a new way of day-to-day working and vault the industry into the 21st century.
Here are the three key ways that the pandemic has permanently altered the broking sector for the better – and what institutional brokerage firms should do to capitalize on this moment:
Leverage Existing Technology
Remote working forced companies to rapidly embrace technology like never before just to get the job done, and now many financial services firms are reluctant to let go of that. Embracing even simple innovations that are standard in other industries – order management tools, remote collaboration tools beyond the Bloomberg Terminal, and more – can only help brokerage firms to work better. Moreover, embracing these available tools forces brokerages to adopt an innovation mindset, which smooths the path for future technological innovations and long-term digital transformation.
Flexible Work Environment
As cities slowly reopen around the country, financial services firms are increasingly asking their employees to fully return to the office. Being in an office boosts productivity and innovation, while fostering company culture. Most importantly, certain financial positions are not suited for continued remote working environment. For example, team communication is essential for brokers (front office) so in-person presence on a trading floor is key to fully resuming operations. However, other roles, such middle and back-office jobs, which are less client-facing and require less in-person interaction could still be very much viable through remote work. The pandemic has forced firms to rethink the way they operate. A culture of work flexibility will be key in maintaining and recruiting talent and improve the attractiveness as an employer.
Junior brokers have options, and recruiting should embrace their existing skillset
Young, hungry junior brokers embrace innovation and technology as critical differentiators when putting their best foot forward on the job. These are also key features they look for when evaluating potential employers – meaning brokerages who shy away from the new are liable to lose young talent to up-and-coming fintechs and other forward-looking firms. That means that brokerages need to put technology front and center in the recruiting process. This will be key to attracting the very workers who will be essential to setting the brokerage firm up for long-term success amid rapid industry innovation.
It’s unlikely that the brokerage industry – or any industry, for that matter – will return to the “way things were” pre-pandemic. It’s wishful thinking to believe otherwise. As a result, brokerage firms must evolve their ways of working to not only remain competitive, but to also future-proof themselves against further disruptions. In the end, those brokerage firms that are able to seize the opportunity to bring innovation to their firms will be the ones that reinvent the industry as a force for innovation.
