Sell-side clearing firms, facing pressure from a competition for talent, higher pay in other sectors, post-crisis reforms hitting profitability and increasing regulation, have turned to technology to address their hiring challenges.
According to The Strategic Workforce Development: Talent and Technology report, drawn from senior clearing executives at 78 firms across the sell-side, these businesses are pursuing technology investment, the ION-partnered Acuiti study reveals.
The reason for such investment is borne out of two converging trends: challenges in hiring and retaining younger talent and the increased attrition from experienced executives retiring or moving out of the industry. The report found that 47% of firms found it “significantly challenging” in attracting younger talent to their derivatives business. Gruelling hours and high-pressure environments were key factors for younger talent in eschewing a career in finance, more broadly.
“This study finds that firms across the sell-side are turning to automation and technology investment to address some of the challenges they face in hiring and retaining talent,” says Will Mitting, managing director and founder of Acuiti.
“This challenge has become more significant over the past 12 months as the operational environment in clearing businesses has improved, resulting in greater demand for talent to grow,” Mitting added.
“Automation and technology investment will go a long way to solving the challenges faced, but ultimately, firms must also expand their strategies to hire and retain talent and look to non-traditional avenues.”
The study found that almost half of respondents, including 76% based in Asia, said attracting younger talent to their derivatives business is “significantly challenging”. In North America, which has the most advanced technology sector, higher wages in other sectors was a bigger challenge than in Europe where it was the appeal of other sectors and the requirements of the role in finance that posed the biggest challenge.
Executives were most likely to report a talent shortage in their clearing operations business, and in margin management. The hiring bottleneck in sell-side derivatives operations is forcing firms to increase wages and leaving firms vulnerable to brain drain as and when key staff leave the business.
In response to the challenges, firms are turning to process automation to eliminate manual processes and unlock time for “higher-value” activities, improving morale and work-life balance to reduce employee attrition. Raising pay was the third most turned to option, in particular entry level salaries.
Almost three-quarters of firms had invested significantly in post-trade technology over the past three years, with 83% of respondents saying this had improved employee satisfaction, while 66% said it improved the work-life balance.
Francesco Margini, chief product officer for cleared derivatives at ION Markets, said: “At ION, we simplify how people work. We do that by automating processes and workflows, and providing value-added information in real time to help people make better decisions.
“Our mission-critical solutions provide integrated trading and clearing connectivity to exchanges and clearinghouses around the world, enabling customers to execute, allocate, and clear their business seamlessly with increased operational accuracy. The result is reduced stress and greater efficiency, freeing up time to focus on higher value activities and grow the business,” Margini concluded.
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