Business

HOW CITY FIRMS CAN SUCCESSFULLY ADOPT HYBRID WORKING

Published

2 years ago

September 8, 2021

admin

Robin Dey, Regional Principal for Client Relations,Unispace

Hybrid working in practice has quickly become a mainstay topic of the conversations surrounding the future of work, especially as employers look to understand how their businesses will be impacted. Recently, accountancy firm EY announced plans for its 17,000 staff to move to a ‘hybrid working model’ that will give them the ability to work from home two days each week. Two of its big four rivals, PwC and KPMG, have also signalled their intentions to make similar switches to their traditional working patterns.

Unispace’s most recent Workplace Market study, which surveyed real estate decision makers from 150 companies with global office footprints, found more than half (52%) of those surveyed anticipate a “return to a new normal” by the end of Q3 2021. However, more than one third (35%) of respondents within the same sample feel that devising a strategy for the future workplace – which is likely to include some element of hybrid working – could be the most significant barrier to realising this flexible new reality. So, what could a hybrid working City look like?

The hybrid working challenge

It’s important to note that – even in the quieter summer months – the return to the office was well underway. In the week of the 16^th of July (which marked ‘Freedom Day’ in the UK) workplaces in the City of London were the busiest they’ve been for 16 months after the government dropped coronavirus restrictions in England. City-working attendance was around 50% of pre-pandemic levels according to data compiled by Google.

The City and Canary Wharf benefit from their clustered natures. Culturally and historically, financial institutions have built their businesses around the idea of working together in close proximity, sharing knowledge frequently and leveraging the power of the group. Investment banking is driven by ideas that spring from in-person brainstorming and collaboration; bringing people together. This powerhouse approach looks to deliver value via its model to both clients and employees.

Financial services firms focus on knowledge sharing – and that was traditionally seen to be done most effectively face-to-face. This is in contrast to many of the retail banks which have historically embraced remote and hybrid more enthusiastically. This is due to the rapid consumer-led digital shift over the past decade, and to support the retailer’s ability to draw top talent from the technology industry (an early-hybrid working adopter) to support their growth. Moves to introduce hybrid working across the City will seek to accommodate these engrained preferences in order to be effective.

Evolving to exceed colleagues’ expectations

A survey from Accenture found that almost a quarter of the UK’s financial services workforce “would prefer to work entirely from home once a full return to office is possible” in a post-Covid world. In the same survey, 69% said they wanted to work two days or less in the office. However, the financial services industry is particularly client-led and many firms have publicly stated their focus on office-based working. While there will invariably be some activities which employees can access remotely, the overall mood music from the sector is one of an industry that is keen to put down a marker for its clients by going back to the office, expanding service lines, and returning to the pre-Covid buzz of collaboration in the workplace. That said, major banks and City institutions also want to remain competitive in terms of attracting and retaining the best talent. Companies need to balance their strategic imperative to reunite the workforce in physical environments with the employee-led demand for flexible ways of working.

Overcoming cultural and generational challenges

The approach to hybrid working differs across geographies. For example, in France and Italy, there’s a demand from some trade unions for financial sector employees to be given the opportunity to work from home at least two days a week as a minimum, which – if it came to pass – would require employers to adopt a hybrid working model. In the UK, by contrast, government guidance has placed the responsibility (and the choice of workplace strategy) firmly in the hands of private employers.

The talent war adds a layer of complexity to the hybrid working challenge for financial services firms. In a sector that some potential employees might perceive to be relatively homogenous, firms that elect to offer some degree of flexibility in working patterns and practices may well be seen as more attractive options for people looking to switch jobs. Indeed, while more senior members of the workforce may be comfortable working from home, the younger generation may not have the space to do so effectively. For younger investment bankers looking to build their networks and contacts, face-to-face interactions are going to be essential – that’s how the industry operates and it’s not really possible to develop the same consistent, and warm types of relationships remotely. As such, the workplace needs to be a space to collaborate, to meet and to grow, a space where culture is created and reinforced and where relationships can be forged and strengthened. So, what does the future hold and how can City firms develop a robust workplace strategy?

A ‘Propeller Framework’ for workplace evolution

The shift to hybrid working will change the rhythm of when employees choose to work from the office – which in turn makes City firms’ workplace strategies that much more important to get right. The office needs to evolve to meet the needs of your employees, assessing their personalities and activities and what is needed to accommodate their preferences. For financial institutions, everyday engagement across teams is vital, while client engagement is all about extracting information, discovering and meeting needs. That’s exactly what a ‘Propeller Framework’ can provide; the opportunity to understand how a company and its people truly want to engage with their workspace and what drives productivity, before implementing ways of maximising space and improving workplace efficiency.

Work is no longer simply a place. Businesses across the globe are looking for workplace solutions that improve employee retention, inspire collaboration and knowledge sharing, and normalise the true definition of flexible working. Focus less on the regimentation of individual desks and more on finding focus space with workplaces designed for collaboration, hospitality and socialising that have the flexibility to expand and contract in line with future needs. It’s not about utilising a one-size-fits-all approach but delivering an individually tailored environment.

Finding a balance between business productivity and meeting the needs of clients requires different perspectives. The old workplace model still has relevance but to move forward it’s important to consult with multiple stakeholders to understand the day-to-day needs of the firm and how a business could achieve its goals more effectively. Businesses may have been forced into change by the pandemic, or because of the cultural alignment driven by globalisation, but there’s now a real opportunity to explore how operating models and workspaces actually function – and the ways in which they can be refined to deliver better outcomes and productivity.

Building flexibility into design

Building flexibility into strategic planning and design will be critical to navigating a successful path towards a hybrid working model and to bring the workforce back into the office in a meaningful and safe way. Businesses may need to pivot quickly as space utilisation needs change. A Pilot scheme is a great option to test new strategies and models, repurposing spaces and collecting the activity data to confirm efficacy and inform future workspaces.

Change management will be vital to the success of any workplace programme. Key will be consistent communications, giving people confidence about expectations, working patterns, environments – whether that’s from a health and safety perspective or a needs and activity perspective – and tying in new technology to enhance employee experiences, and drive organisational culture.

While hybrid working can challenge how financial organisations have traditionally worked, it also presents an opportunity to evolve the workplace to better meet colleagues’ current and future needs. Businesses can balance these new needs and simultaneously create a centre of activity for collaboration, employee development, and client engagement, functioning alongside employees’ preferences for hybrid working rather than in opposition.

Up Next

HARNESSING CONNECTIVITY: THE KEY TO GLOBAL EXCHANGE OPERATORS FINDING NEW HORIZONS IN THE CLOUD

Don't Miss

A LOAN VS. A LINE OF CREDIT – WHICH ONE IS BEST FOR YOUR BUSINESS?

Business

Revolutionizing Risk: Innovative Derivatives to Support the Evolution of Commercial Space

Published

1 day ago

December 2, 2023

admin

By Grant Gryska, Co-Founder and Director of Markets at Allocation.Space

The space economy continues to expand rapidly, crossing $500bn in revenue in 2022, 78% of which came from the commercial sector[1]. Major developments like the successful test launch of SpaceX’s massive Starship are set to radically change the cost of getting mass to orbit, unlocking new possibilities for business in space.

This growing market presents outsized opportunities for investors, insurers, and businesses. But, as enterprises extend their reach beyond Earth’s atmosphere, risk management tools must evolve to meet the new and unique challenges they face. A new generation of derivative instruments is emerging to support the commercial space sector while complementing traditional insurance models.

A Paradigm Shift in Risk Management

Traditionally, space ventures were funded by governments and international space agencies — institutions that were able to absorb risk and ignore bottom-line concerns. The arrival of private space companies such as SpaceX, Vast, and Blue Origin represents a material shift in the trajectory of commercial space. National interest is no longer enough; space ventures must also turn a profit, which means managing risk. These enterprises are pushing the boundaries of what is possible, requiring a comparable evolution in financial tools to support their endeavors.

Grant Gryska

We’re now seeing a new generation of companies building platforms to host derivatives that enable enhanced risk management for the space industry. By hosting these products on a Swap Execution Facility (SEF), the aim is to bring pricing transparency and efficiency to the sector via a centralized venue. Unlike traditional insurance, which often relies on predefined policies and premiums designed to mitigate specific critical loss, swap contracts do not require proof of any actual loss or attribution, broadening the universe of potential participants in this growing market.

Derivative Instruments for Commercial Space

Derivative instruments tailored for the commercial space sector will help mitigate risks and enhance financial flexibility as the barriers to entry come down and competition increases.

Space Weather Derivatives (SWDs): With satellite anomalies demonstrating a 74% correlation[2] with geomagnetic disturbances caused by the solar wind, these products will become invaluable in managing revenue loss due to these disruptions. SWDs will ensure a smoother execution of space missions and terrestrial applications such as power grid management.
Space Derivative Contracts (SDCs): SDCs allow investors and companies to hedge against price fluctuations in space-related assets. Whether it’s fuel, space-based resources, or payload rate indexes across launch platforms and locations, these products provide a means to lock in prices, offering stability in an otherwise volatile market.
Space Options (SOs): Like traditional financial options, SOs provide the right, but not the obligation, to buy or sell a space asset at a predetermined price and time. This allows investors to capitalize on favorable market conditions while limiting downside risk.
Space Risk Swaps (SRS): SRSs enable entities to exchange or transfer specific risks associated with space activities. For instance, a satellite operator concerned about launch delay or orbital debris may enter an SRS with a risk-taking party, effectively transferring the risk to them. These products diversify risk and encourage collaboration among industry players providing complementary services like debris mitigation.

Complementing Traditional Insurance: Bridging the Coverage Gap

While traditional insurance remains a fundamental component of risk management, derivative instruments offer a more nuanced approach targeting the risks to revenue. These products provide a level of risk granularity that traditional insurance may lack or be unable to cover economically, which has left 99% of LEO (Low Earth Orbit), and 73% of MEO (Medium Earth Orbit) and GEO (Geostationary Orbit) satellites uninsured on orbit as of 2022[3]. This is crucial in an industry where risks to launch platforms, satellite technologies, and commercial objectives can be highly specific and variable.

The Future of Space and Derivative Instruments

There’s a growing cluster of companies looking to transform the financial products and venues supporting the commercialization of space. The derivative instruments being developed with the help of space industry players will provide a forward-looking and adaptive approach to risk management for space, complementing traditional insurance models.

As the commercial space sector continues its trajectory beyond Earth, these innovative financial tools will play a pivotal role in ensuring a robust and resilient financial ecosystem for companies participating in the space economy.

[1] https://www.spacefoundation.org/2023/07/25/the-space-report-2023-q2/

[2] Choi, H. S., J. Lee, K. S. Cho, Y. S. Kwak et al., 2011, Analysis of GEO spacecraft
anomalies: Space Weather relationships, Space Weather, 9, S06001.

[3] https://spacenews.com/connecting-the-dots-space-insurers-toast-another-profitable-year

Business

2024 Payments Predictions

Published

2 days ago

December 1, 2023

admin

Alan Irwin, Vice President of Product & Solutions Europe, Global Payments:

Open banking in 2024 will be all about the consumer

“2023 has been a huge year for open banking adoption, surging 68.2% from the previous year to hit 4.2 million users in the UK in July. Open banking enables consumers to provide third-party providers (TPPs) with secure access to their payments account, meaning that payments can be made through these TTPs directly from their payments account and without the need for cards.

“With more people using open banking for payments, in 2024 consumer expectations of open banking are likely to increase dramatically. Consumers will demand higher levels of speed, convenience, and security around open banking as a payment method. As a result, there will be a renewed focus on the availability and performance of APIs and user interfaces. Without improving these features, TTPs will see growth in open banking payments stagnate and even struggle to compete with digital wallets and standard cards.

“2024 will also see a stronger emphasis placed on consumer protection from fraud and scammers. With £239.2 million lost to authorised push payments (APP) fraud in the first six months of 2023, security is front of mind for businesses and their customer bases. A key differentiator for open banking and card payments is the liability protection offered by cards through the disputes and chargeback processes. Merchants and consumers alike want the power to protect themselves with tools and processes to limit financial exposure. As such, to grow in the coming year, TTPs will need to develop and implement enhanced risk and fraud prevention tools to help drive confidence in the payment channel and mitigate concerns around exposure.”

Competition between old and new banks will intensify around convenience

“Growth in consumers’ desire for a financial ‘super app’ experience will put a great deal of pressure on traditional financial institutions and increase competition between neobanks and legacy banks in 2024. A financial ‘super app’ is a single mobile application that can be used to manage all aspects of your financial life, including services that range across savings, investments, mortgages, and payments, for example.

“Neobanks, such as Revolut, are creeping into ‘super app’ territory: providing a range of services, from shopping discounts and savings pockets to instant currency conversions and stock investing, all on a single mobile application. So far, these developments are almost exclusively in the consumer banking space. However, in 2024 we will see the neobanks push their payments offerings further up the value chain into the B2B world, challenging traditional banks on another front.”

Ecommerce checkout enhancements

“In 2024, payments providers and their clients will place a fresh emphasis on customer experience, as demand for convenient and slick payment processes continues to increase. Currently, 69.57% of online shopping carts are abandoned and less than one fifth (17%) of retail, leisure and hospitality transactions are made through digital wallets, showing that much more needs to be done to offer smoother payment infrastructure online and in-store. As such, in 2024 businesses will focus on customer experience as a means of increasing customer loyalty and slashing cart abandonment rates in the process. Moving away from slow, clunky payment experiences to offer customers the ability to pay for something with a few clicks through biometrics, which allow customers to pay with a simple face or fingerprint scan, and digital wallets, which store customer payment information, is the primary method that businesses should be using as we approach the new year to tackle this issue.”

Data Storage and Keeping Customers On-Site

“Providing a top-quality payments experience will go hand-in-hand with ensuring that consumers feel safe at the checkout, especially with soaring cybercrime. In 2024 we’re likely to see more use of card data storage and tokenisation to further reduce cart abandonment rates as they allow consumers to store their card details for future use, making their next purchase at the ecommerce store much faster. Network tokens in particular, which are tokenised payment details saved for a specific card and merchant pair, drive higher approval rates for merchants and offer a more secure form of payment than raw card data entry. In addition to this, continuously updating customers’ card data further reduces friction in the checkout and drives better cart conversion.

“What’s more, customers are also put off payments when they are redirected to another (3rd party) site to complete it, as it is unfamiliar to the rest of the checkout process, often doesn’t carry the merchant brand and thus deemed insecure. Therefore, reducing site changes as much as possible and using clear branding and UX to ensure customers are aware that they’re still on this same site is key to instilling a sense of security. Similarly, real-time data validation built into the payment form can prevent bad data from being entered in the first place, such as invalid PAN, expiry date, or security code, as well as keeping out bad actors from spamming through card data en masse.”