The outbreak of COVID-19 has caused extraordinary global disruption, and financial markets have felt its full force. With volatility soaring, asset managers and their service provider partners have been met with a heady mix of increased trading volume and rapid price fluctuations. This has placed a heavy strain on processing centres, drawing parallels with the global financial crisis. Unlike 2008 however, COVID-19 has resulted in an unprecedented global displacement of the workforce. This likely being the greatest processing challenge our industry has faced in a generation.
With many asset managers outsourcing some degree of their middle and back office operations, the resilience of their service providers has never been in sharper focus. Early indications seem to suggest that the community has responded well to the crisis, but the ramifications could still be far reaching.
Sionic conducted a snap survey of asset manager clients to assess perspectives on the performance of their providers. The poll asked participants to rate communication and engagement levels, in addition to the quality and consistency of service delivered. With 23 responses spanning 10 major service providers, the headline sentiment is incredibly positive.
There was almost universal recognition of the Herculean effort by the community to overcome this challenge whilst maintaining service levels. In addition, all scored well on engagement, communicating both challenges faced and the steps being taken to overcome them.
Whilst it may be tempting to declare this a resounding victory, there is much to reflect on and doubtless further challenges to be overcome. Many respondents expressed concern about provider dependency on a single region. Pass-the-book service models have been severely tested, as have remote working capabilities. A degree of leeway was also noted, given few had predicted such global disruption just a few months prior.
Service providers deserve praise for the lengths they have gone to preserve service levels, however the ramifications of this crisis are likely to test the industry further. BCP will doubtless come under renewed focus, with further resiliency of location strategy demanded. Opportunity may also arise, as many managers consider the performance of functions currently retained in house. The hard work may have only just begun.