What will the post-coronavirus investment banking industry look like, now that we have had this huge experiment with the positives and negatives of remote working? Unfortunately, historic experience suggests that if you want to forecast the direction of technical and organisational change in financial services, a good starting point is to ask yourself “what would suck the most for mid-level employees?” and go forward from there.
Consider, for example, the IPO roadshow. In the new world, this doesn't look so great: instead of hotel living and room service, bankers can now expect to be shut in a room at home for four days, doing back to back video conference calls. Clients are already setting the pace - the Financial Times has unearthed one, Anthony Sun from Zentalis Pharmaceuticals, who prepared for last month's IPO by commandeering his children’s bedroom, sleeping in their bunk bed and emerging only to use the bathroom and collect food left outside the door by his stoical wife. Bankers be warned.
The advantage of the new model is that, obviously, that you have less travel time. The disadvantage appears to be that the time saving is entirely eaten up by putting more meetings in during the roadshow period, presumably with smaller and more marginal clients. You’re not really improving your work-life balance, just effectively swapping seven meetings and a restaurant meal for ten meetings then cooking your own dinner, or persuading a member of your family to cook it for you.
Is this really a great exchange? Traditionally, there are two periods in every banker’s career when they want to go on business trips. At the beginning, when you’re young and visiting places for the first time (and when your living conditions are maybe not quite as nice as an average hotel). And during the first years of parenthood, when three hours’ sleep snatched between a midnight landing and a breakfast presentation sounds like an unimaginable luxury. Even outside these times, though, the comforts of home and hearth can sometimes get boring, and the prospect of a couple of weeks of cooked breakfasts and late night karaoke can seem curiously attractive. There are plenty of reasons why bankers want to make sure they don’t lose Gold frequent flyer status.
As the pandemic recedes we may end up with a hybrid model. It's not hard to conceive what this could entail: The MD gets on the plane with the CEO, to see all the big cornerstone investors, on a civilised schedule of meetings and (as the fees on IPOs are still fantastic), existing in a world outside normal expenses policy. Meanwhile, the rest of the team sit back in the office, separated by plexiglass partitions to work a twelve hour day talking to clients who are all slightly angry that they weren’t considered important enough for a face-to-face.
This might be the future of perks in general – rainmakers get to sip socially distanced gin fizz at the Chelsea Flower Show, while Associates and Vice-Presidents try to invite their clients to a virtual Maroon 5 gig. It’s a shame really; a lot of the attraction of banking used to be the lifestyle, and that includes the high living which used to be possible on the company credit card.
Elsewhere, Goldman Sachs is out on the metaphorical road marketing its cash management services. It has been showing a timetable to prospective clients under which “corporate Marcus” will be launching in September in the U.S. and Europe by the end of the year. They’re aiming to pay up a bit, but not too much, for corporate deposits, pitching their pricing at the 70th percentile of the range of market offerings. The idea seems to be to let their “intuitive and transparent” client front end do most of the work in attracting custom, and to rely on the fact that even a comparatively small market share is still a lot of money.
This is likely to mean that GS will be hiring, and not necessarily just for programmers to make the tech work. Corporate cash management is quite demanding in terms of personnel, simply because corporations are complicated customers who are always trying to do things that you weren’t anticipating. And this is a priority area at Deutsche, JP Morgan and HSBC too, so the labour market is likely to be tight. If you’ve got the skills and relationships to do this kind of business, it could be a good year.
Franklin Templeton has fired one of its portfolio managers, who had appeared in a viral video demonstrating an unusual understanding of risk management by threatening to call the police against an African-American birdwatcher who asked her to put her dog on a lead. (Business Insider)
The NYSE trading floor is scheduled to reopen, although with only 100 staff and nearly all the actual trading still being done by specialists working from home. Chief Commercial Officer John Tuttle says “it’s a symbol of capital markets”, although since the tourists are absent from Manhattan it’s not clear who it’s symbolising to. (Reuters)
In fact, human interaction of all kinds has got less important to trading business; the decline of “voice” broking relative to screen trading has accelerated rapidly after a brief spike in importance during the market dislocations (Financial News)
According to a survey carried out by Deloitte, 43% of finance workers expect to keep working two days a week from home even after the lockdown ends (The Times)
A messy desk can make you more creative, according to business professors – since for the foreseeable future this isn’t going to be possible in a world of frequent deep-cleaning and rotating teams, they suggest you keep your “creative” desk in your home working space. (Bloomberg)
Iqbal Khan has hired a former “key ally”, Remi Mennesson, to run a financing team for ultra high net worth clients at UBS. He will report to the co-heads of investment banking as well as the co-heads of wealth management. (Finews)
“This way they’ll make the most of the experience, rather than stressing about how to show myself when I’m not sitting there with my manager”. Jane Fraser of Citi sets out their reasons for offering jobs to the whole summer intern class. (Fortune)
Make a business case why you need to be back in the office? The combination of huge amounts of money, not much control over their buildings and a very high degree of key-employee risk have motivated hedge funds to get pretty creative in designing post-lockdown working practices. Millennium management has a 50 point checklist that includes details of commuting and vacation planning, and its people won't be back in the office before September anyway. (Bloomberg)
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