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Banking's backbone

Demand for operations specialists remains strong despite offshoring

Operations professionals working in banking and finance are often seen as the “unsung heroes” of the sector. While the revenue-generating front office takes all the credit when times are good, it’s in the back office – the behind-the-scenes world – where the real heavy lifting is done.

Depending on the specific financial sector, operations roles can be quite different. In investment and private banking – which share similar products – it’s about services such as settlements, corporate actions, trade support, reconciliation, client onboarding, and physical commodities operations. In commercial banking, operations roles deal with issues such as trade finance and settlement, and foreign exchange. Finally, owing to its more vanilla product-portfolio nature, in retail banking it can cover areas such as account opening, cash management, loan credit documentation, mortgage processes and reconciling SWIFT payments.

“It actually depends on the organisation,” says Mark Andrews, director of banking and financial services at recruitment firm Hudson. “Some banks have consolidated all their operations across different functions.”

Carrie Leung, CEO of the Hong Kong Institute of Bankers, says the behind-the-scenes nature of banking operations make it an ideal launch pad for ambitious banking executives. “They know the business and how it operates,” she says. “The operations department of a bank is involved with a wide range of services, and they know how all of it works.”

She adds that successful banking executives from the back office would typically acquire external customer-facing experience at some point in their careers to round off their skills and competencies.

One trend which is affecting banking operations more than other parts of the business, Leung explains, is the increasing use of technology to serve customers, such as by making banking services deliverable through the internet and on mobile devices. Customers, meanwhile, are given access to information quicker than ever before. For example, in the past, customers seeking to refinance their mortgages would have to wait up to three months for the paperwork to be processed. Nowadays, this has been shortened to two days or less, dramatically shortening the cycle within which the back office provides operations support to client-facing parts of the bank.

While banks typically seek out individuals with sociable personalities for client-facing roles, banking operations roles are ideal for people with an eye for detail and who are self-motivated, Leung says. However, as individuals become more senior, key competencies become more generic and an increasing focus is placed on communication skills. Executives would increasingly deal with a range of internal departments and be expected to take the lead on projects.

As for the job market for operations professionals, Cindy Chen, country head for Hong Kong at Citi Securities and Fund Services, says one area that has seen strong demand is the fund-services industry. This area has benefited from the expected imminent launch of a landmark mutual recognition of funds between Hong Kong and mainland China. This will allow authorised investment funds in both markets to be sold on either side.

“There’s definitely a shortage of professionals at the moment, given the strong initiatives from the government to further develop the city as an offshore renminbi centre and regional asset management hub,” Chen says. “Initiatives to create special access to the China market have really created a lot of need for institutions to build up their own staff and broaden their product offerings to be ready for these opportunities down the road.”

Andrews says that while there’s been a continuous off-shoring drive of banking operations since the global financial crisis of 2008, demand for banking operations staff in Hong Kong has held up remarkably well.

“I would say against some expectation that the banking operations areas are still relatively buoyant,” he says. “This is despite the fact that many organisations have been offshoring what they deem as more production-type roles to places like India, the Philippines and Malaysia. Demand has dropped since 2006 or 2007, but it is still relatively consistent.”

He says hiring in banking operations typically lags behind front-office roles, although for different types of financial institutions, headcounts depend on different variables. For example, in asset management companies, hiring is determined by total assets under management, whereas in investment banking it hinges on deal activity – which is often difficult to predict.

Because banking operations encompasses such a broad cross-section of services, he adds, it is difficult for executives to switch between different services mid-career. At the moment, demand tends to be strongest in trade support and client services, and most banks are hiring to replace attrition.

Pay varies across organisations, Andrews says, but the rule of thumb is that Western banks tend to pay better than their local counterparts. Base salaries are consistent with those in the front office, but the latter would receive more total compensation. For switching jobs, he adds, it is not unusual for successful candidates with relevant backgrounds and experience to receive increments of between 15 and 20 per cent.

“The theme in the market for support functions has been moving towards it being an experienced onshore function, with more business communication and stakeholder management associated with it than the offshored production roles,” Andrew says. “Just by the way it’s worked out, it means that the roles onshore tend to be a little more senior.”