With the vast majority of financial market participants working from home until further notice, the focus has turned to how technology best supports investment managers, hedge funds, banks, and other such firms amid the redrawn landscape.
Gone are the days when business continuity plans would be simply having an office in another location. In 2020, critical elements of a sustainable BCP include a robust distributed infrastructure, utilization of information technology as a service (ITaaS), and a multi-cloud strategy.
“It’s not just about hosting meetings via video conference, it's about having a full-stack approach to remote working,” says Anya Boutov, Chief Revenue Officer at Beacon Platform, a global capital markets technology firm, which has helped global banks, insurers, asset managers, and energy companies modernize their infrastructure through cloud-enabled solutions.
COVID-19 has forced lockdowns around the world, particularly in major financial centers. Regulatory bodies around the globe have instituted work-from-home guidelines for the near term, and even after economies reopen, many expect longer-term impact as to how and where people work going forward.
From a financial technology perspective, COVID-19 follows 9/11 and the 2011 earthquake in Japan as major BCP events. But each situation’s challenges are unique. “There’s no playbook for this environment, but we’ve been able to help our clients adapt. Beacon has made sure that our clients have continuity of access to systems, are able to on-board new users quickly and securely, and have the flexibility to scale up infrastructure on demand,” says Boutov, who spent nine years in fixed income sales at Goldman Sachs and three years as a senior policy advisor at the U.S. Department of the Treasury before joining Beacon in 2017.
“As financial industry leaders take stock of the lessons learned in this environment, there will be a lot more value in having a platform that provides the resiliency to weather the next storm and enables collaboration between business and technology teams,” Boutov added.
For financial firms, one commonality when an exogenous shock causes market stress is a heightened emphasis on risk.
“When markets move fast, you need to see your risk intraday. No one wants to fly blind,” says Boutov. “In times of stress you need to move at the speed of relevance, so your risk system must be flexible enough to handle different scenarios, and at scale,” she said. “This isn't the time to put in a request for hardware and wait six months for delivery. With Beacon, our clients are spinning up capacity within minutes on the cloud provider of their choice, and then automatically shutting it down when they’re done.”
BlackRock, which manages $7.4 trillion in assets, outlined the importance of technology infrastructure on its April 16 earnings conference call. BlackRock COO Rob Goldstein noted that the week of March 16 presented the highly extraordinary scenario of 95% of the firm's employees working from home, while equity trading volumes were 65% higher than the firm had ever experienced.
The challenge was to process record volumes and to provide transparency into portfolio risks amid rapid change, high volatility, and high stress. “Market shocks and market volatility just underscore the need for robust enterprise operating and risk management technology,” Goldstein said.
Across industries and government, cloud technology has distinguished itself through the COVID-19 lockdown, according to researchers from Forrester Research, Gartner, and Syracuse University. One tech journal mused about the cloud being the “superhero” of the global pandemic. Whether or not the cloud has a shield or superpowers, the technology has at least moved from ‘nice to have’ to ‘must-have’ for capital markets firms, Boutov notes.
COVID-19 will dissipate at some point, but its impact on capital markets technology will endure. “Established companies will have to rethink BCP procedures that were developed with physical infrastructure in mind,” Boutov said. “For new businesses, choosing IT as a service will be more compelling than ever.”
