EXCLUSIVE: “Sunset on the Office”- Nick Botha, AutoRek; Tony Warren, Lloyds Banking Group and Robert Swales, Nationwide in ‘Discover Money20/20’

As home working becomes a permanent arrangement for many, AutoRek’s Nick Botha, Tony Warren from Lloyds Banking Group and Robert Swales at Nationwide consider how regulated industries will build around it.

One in four of the UK’s one million financial services employees wants to work from home full-time, while 69 per cent don’t want to spend more than two days a week in the office. The figures, revealed in a survey this summer from Accenture, suggest that, despite Zoom fatigue, and pets, partners and kids doing their best to distract them, staff won’t be rushing back to their old desks any time soon. Is that a problem? Quite the opposite, say the researchers. In an earlier study – during the last lockdown in February – they suggested that a remote or hybrid workplace policy would a) save firms a fortune, b) improve productivity and retention, and c) give the industry access to a borderless talent pool. Many employers who had gone through the pain of rapidly transitioning the majority of staff to homeworking during the pandemic had already, in fact, come to broadly the same conclusions.

 By March this year, Nationwide had told 13,000 staff they could choose to work interchangeably from home, their local branch or the bank’s HQ. Its own internal survey suggested more than half would opt for the first, permanently. Lloyds Banking Group is currently also working on a pick’n’mix approach; a strategy that will allow staff to choose between home/hub/hybrid locations, which could see the organisation slash office space by 20 per cent over three years, according to management. The freedom to ‘locate for your day’ speaks to a progressive new era in industrial relations, but it’s far from simple to achieve in a heavily regulated environment like financial services. Under pressure to relentlessly raise the bar on cybersecurity while simultaneously coming up with new and improved products and services, institutions were forced during the pandemic to rely more on third-party providers as they coped with this new way of working. 

“No matter how defined the rules and regulations are, or how robust you think your internal systems are, there’s always the next thing lurking around the corner,” observes Nick Botha, business development manager for Scottish regtech AutoRek. The fatality of that argument was proved in March 2020, since when, says Botha, there’s been something of a sea-change in financial institutions’ attitudes towards partnering with companies like his own. The change has been for the better, he says, allowing banks to focus on their key activities, while their technology partners can focus on what they do best. “Financial institutions need to shift their mindset, from controlling everything in their boundaries, to really partnering with the right organisations,” says Botha. Regulatory and financial controls are where AutoRek is focussed – and that’s very much middle and back office territory where banks have been guilty of building high walls around their IT systems in the past and not engaging particularly well with third-party providers, particularly younger fintechs.

The government-backed Fintech Pledge, launched last year, aimed to address that by encouraging enhanced collaboration between banks and fintech firms, thereby ensuring the UK’s continued position as a global fintech hub. Both Lloyds Banking Group and Nationwide are signatories to the Pledge and, when the pandemic hit, were already deconstructing their organisational models as part of ongoing digitisation journeys. Nationwide had, in fact, rolled out Microsoft’s collaboration tools Office 365 and Teams in 2019, and as both banks were clients of AutoRek, compliance was not compromised in the shift to remote working as processes were in place. Tony Warren, senior manager for automation at Lloyds Banking Group, says that in the last 12 months the bank had ‘probably moved on 10 years’ worth of technology, speed, and working in a more agile way… and we will not be going back to the way we were’. If that’s the case, then any temporary spotlight thrown on the particular challenges of compliance in a crisis, particularly to do with home working, will be turned on to full beam.

Back in March 2020, the UK’s Financial Conduct Authority initially indicated an easing of rules governing data privacy, fraud and money laundering, offering some ‘flexibility within existing requirements’ around, for example, identity verification. But that didn’t last long. As far as monitoring and compliance are concerned, it now expects working from home to be equivalent to working in the office. In October it reminded firms that it expected them ‘to have updated their policies, refreshed their training and put in place rigorous oversight reflecting the new environment — particularly regarding the risk of use of privately owned devices’. It was against this background of heightened operational risk, in fact, that AutoRek struck a new partnership with iSoftware4Banks, a US-based provider of services to support effective financial reporting and compliance. At the time, AutoRek said that the rapid shift in company-wide working from home had ‘resulted in various operational issues surfacing across banks, credit unions, investment managers and insurance firms, thereby requiring IT infrastructure, systems and outsourced services to be reviewed globally to future-proof robust operational resilience strategies to ensure uninterrupted service’.

“A lot of this is still new to the regulator as well,” says Robert Swales, a senior finance systems manager at Nationwide. “As the regulator’s understanding of the markets’ needs – Cloud technology, for example – improves, it allows us to do more than we’ve been able to in the past“What’s acceptable to the regulator is something that we have to be mindful of as we look at new technology. We don’t want to take a punt on something, because stability is so important to finance. Making sure we’re buying the right products, the ones that are secure and resilient, is key. It’s why we have to work hand-in-hand with the regulator on some of this.”

There are other risk factors, too, such as how to limit internal fraud when staff are operating out of private premises where the usual monitoring and constraints don’t apply; and how employers in regulated industries certify the suitability of new employees and whether in future that will cause more intrusive background checks into their domestic lives.

Tony Warren believes financial institutions’ in-bred awareness of enterprise-wide risk management means they will move fast to find answers to all this and more. “I’m not going to say it’s easy, because 15 months ago, no one was foreseeing this, but we do have that ability,” he says. “A lot of it comes down to the tech we use; the stronger the tech, the greater our control. But it’s also about the culture of the organisation and what we want our risk appetite to be. Underpinning that is a strong business model of risk management.”

Given the quantum leap in technology over the past 18 months, neither Tony Warren, nor Robert Swales, believes that, in the medium term, technology will be the principle limiting factor to banks adapting to the new norma, though – it will be finding the best way for staff to interact. They both found video conferencing platforms like Microsoft Teams and Zoom invaluable in maintaining communication and continuing projects during lockdown. In particular, they helped Nationwide progress its partnership with AutoRek, the often logistical nightmare of trying to get various super-busy senior executives from two organisations into a room together, replaced by a simple virtual meeting they could attend from anywhere.

“Some of the collaboration tends to be a bit more challenging, and sometimes you end up having to have more meetings to get the same points across, but, overall, the experience we’ve had at Nationwide is that we’ve not dropped the ball. The projects that I’m involved in are keeping the same pace of delivery that we would’ve had in a normal situation,” says Swales. “The biggest challenge is more on the people side: teams that were used to working together, day in, day out in the office, just don’t have that same experience now that they’re working from home. For back office and middle office, that’s really where the work is now, just in terms of how do you embed people and culture in this new world?” 

With Cloud-based applications the direction of travel for a lot of companies, ‘making sure we’ve got security and control is really key’, says Warren. “But all of that is underpinned by the collaboration tools, because without the ability to collaborate effectively, we won’t be able to deliver much at all.” He is unclear how managing employees in disparate locations will work best. Then there is the challenge of building remote teams and bringing new people into the organisation. It saddens Swales that the next generation’s experience of the industry will be very different to that of his own. “Those of us who are some way into our careers have built networks, know how the organisation works, know how to get things done. That’s something that’s been built up over time, through working with people, and networking. In the new world, though, how is that going to be possible?

“That’s the big challenge that no one’s really answered yet,” says Swales. “Because you don’t have those coffee conversations or corridor meetings; where you are introduced to somebody who’s on your periphery, who then opens doors to different conversations, and opportunities to network. In this Teams world, this Zoom world, you very much do the work, and speak to the people you need to speak to; you don’t necessarily stray from that path. “We’ve a new staff member starting in the team next week whom I’ve never met in person and maybe I never will, because now we’re starting to recruit people from a much wider area who don’t need to commute to London or Swindon. The pros and cons of that are you get a much wider pool of talent, more diversity, new ideas, new ways of working and thinking. But the challenge will be how to develop them. I imagine that’s something most organisations are really going to be grappling with, over the coming months and years.”

Despite the pain and the as-yet-unanswered questions, Botha is convinced that the industry won’t regret the changes it’s made. “This time last year, when everything started to become quite manic, we saw clients particularly stressed and worried about what their world would look like – their business-as-usual processes completely changed,” he says. “But I think now everyone’s a bit more comfortable with the home working environment, everyone’s done what they needed to do in the last 12 months to remain ahead of the game, and I think the general consensus, from everyone that I’ve spoken to in the industry, is that they’ve been quite successful. We’ve paved the way for a new way of working for generations to come.”

This article was published in Discover Money 20/20, Page 14-15