Sector expertise indispensable for optimal performance in operations and finance
New way of working leading to demand of new profiles
Insourcing of activities in financial institutions to cover periodic peak moments
After completing his Master in Commercial & Financial Sciences at ICHEC in 1992, Olivier’s first job was to manually search for irregularities in lists of figures. "For several months, I have been doing all day long controls on figures fully manually, by literally highlighting unreconciled figures with a green fluorescent pen. Things have changed a lot since then," he notes with a laugh. The digital revolution is causing a landslide in the tasks of consultants carrying out Transition & Support projects in financial institutions.
“Through insourcing, we are able to take-over, partly or completely, selected processes in the Finance, Risk and Operations departments of financial institutions.”
The Operations related tasks of the consultants are located in the Middle and Back Office, Olivier explains. After the Front Office of the Financial Institution has completed the transaction with the customer - such as buying bonds, life insurance, or taking out a mortgage - the Middle Office takes over. Its main tasks are to carry out the necessary checks to guarantee the integrity of the transaction and its underlying data, to perform different types of analyses, and to produce ad-hoc reports.
“No more repetitive tasks, but rather analysis, reporting and problem-solving.”
The Back Office is responsible for administrative processing and the pre-bookkeeping phase, Olivier continues. For example, it ensures that the transaction is confirmed to the counterparties, it ensures the necessary payments, and several other tasks, called Clearing & Settlement. "This process used to require several manual interventions, by different people. In the past, the information only came to the client after a few days of processing time. Now, the consumer has that information in real time on his laptop, via home banking or his app."
This revolution, the acceleration which has been tremendous in recent years, is changing the profile of employees who take up roles in the Middle & Back Offices and Finance. As an example, the majority of transactions are now processed fully automatically in Back Offices: 'Straight-Through Processing (STP)'. No more fluorescent pens, but 'exception management' where only the operations that pose a problem are addressed. No more tasks with little added value, but rather analysis, reporting, problem-solving, and strategic advice. We can extend this to Finance departments, where reconciliation processes are all done automatically, and where people can now focus on solving residual issues.
Reporting has taken on an increasingly important role, especially in Operations and Finance. "In the past, decision-makers were given simple excel sheets. That's different now. Think of advanced tools like PowerBI, which provide much more and much clearer information that senior managers can use to make better strategic and tactical decisions."
Performing operational tasks should be seen as an expertise in itself. The consultants involved ought to know the business thoroughly and should be experts in their field. Therefore we follow our consultants closely through mentoring and provide them with the necessary guidance as to methodologies as well as project and process management.
The examples are multiple and Olivier pinpoints two of them: “During the transformation processes at the bank Van Lanschot we supported running the bank, with a focus on processing securities orders and payments. A big challenge was to ensure the proper execution of the brokerage department during the coronavirus outbreak as the number of stock exchange transactions was skyrocketing.” Another example is the support of one of Europe’s largest banking & insurance groups in its day-to-day operations while scaling up its fraud team in order to kill the backlog and future-proof the department.
“It benefits a career when you know all about the roots.”
"That's why our consultants have expertise in underlying activities: securities, credits, payments & accounts, financial markets, insurance contracts... They know what they're talking about. This may seem straightforward but is paramount when the client asks them to handle exceptions and solve a problem." Olivier considers himself lucky to have started with the basics of operations and finance. He notes that this didn't prevent him from rising to a Senior Executive position, reporting directly to C-level in a large bank and insurance group. "It's a good investment to start at the beginning. It benefits a career when you know all about the roots. A house needs strong foundations, right? Robots may already be taking over many tasks from humans, but humans still need to know and understand what robots are doing, and how."
Olivier puts the insourcing of activities in the spotlight. Insourcing means that we are able to take-over, partly or completely, selected processes in the Finance, Risk and Operations departments of financial institutions.' He gives two examples: "In the period of the construction fair Batibouw, banks are confronted with a peak in applications for a mortgage loan. Well, TriFinance is taking over part of those activities, enabling them to rapidly handle demands. In the Life Insurance sector, the workload increases structurally several weeks before and after the end-of-year period because of regularisations and insurance transactions of self-employed workers. Again: TriFinance comes to the rescue. It also does so when financial institutions take their people away from day-to-day activities to deploy them for several months in projects. That happens more and more often and then TriFinance takes over the daily activities of those involved. This is called back-filling."