Monday, August 8, 2016

The Changing Face Of Client Service into Business Analyst

Hello! As your Financial Careers Examiner, let me share just a little of what I have seen within my career within Financial Services. There are loads of aspects of Financial Services, but let me share a little bit on my role which has covered the Back Office moving into the Middle Office arenas. I started back in the day (as noted in my first Examiner report, "How Wall Street looked to a high school student". I understood back in the day, starting in the Back Office that I would definitely be "Hands On". I actually held in my hand some instruments that are rarely found in physical form anymore such as Certificates of Deposits, Bankers Acceptances, Ginnie Mae's, Fannie Mae's and Treasury Notes with the Coupons attached! Let me emphasize here that these disciplines within your Financial Services Career are excellent to have; after you have obtained them it's important to broaden your horizon or scope of knowledge. Why you may ask??? If you are happy in just that discipline, fine. If you are sure you will always have that position, fine? This was a very valid school of thought in the 1980's! With the onslaught of the Financial Crisis we have seen, this is no longer case (more on that a little later). I had the opportunity to "branch out if you will" and while still in a Back Office setting I was able to add on Foreign Exchange (Remittance, Confirmations, Settlements, etc.), supporting the Front Office Traders. From here I moved into the Middle Office, where while I was not so much "Hands On", I was more of a Liaison between the Clients and the various other groups such as Back Office. The Benefit was having worked in the Back Office, I was able to "feel" what they were doing if that makes sense and also because of the networks developed, and I had people to reach out to in trying to meet goals. The Middle Office called upon my knowledge obtained in the Back Office, Money Market, Equity, Fixed and Foreign Exchange. Let's break this down further (in terms of the impact of change within Financial Services) as you are looking at your Financial Career. What has happened is this: Little known to us, those physical instruments have gone away as they are morphed into book entry form, so everything is on the system. Where it would take me working through my lunch hour in the back office trying to count physicals such as Municipal Bonds, it is no longer the case with them being converted into book entry from. I mean I would actually have a stack of securities the height of my desk "dropped off" for me to count as it was a delivery from one counterparty to another. With the book entry format, the counting (among many other thing we would have to do such as stamping each security with our Nominee Name (oh the pain!!!) to make it negotiable) has gone away. With the Economic Crisis events such as 9/11, it has made companies think about really spreading themselves out more geographically. Within the "Location Strategy" initiatives, more onshore jobs and less onshore people have been offshored. With huge financial losses suffered by firms, many have closed down. It behooves those pursuing a career within Financial Services to learn as much as possible to be as diversified as possible. You will then not be dependent on just on discipline and one firm for your whole career. That one discipline may change (ex. physical to book entry). That one company may outsource that discipline as well. I started noticing while in the Middle Office using my Back Office skills to assist me on the a day to day basis, that the Client Service role I was performing in the Middle Office was evolving more and more into an Analytical role or Business Analyst role geared even more towards Process Improvement. I began to take on Business Analyst Roles and found that in seeking to broaden my knowledge, Business Analysis is in no way limited to Financial Services, but is in full swing in many industries. This opens the door when not just a company but an industry may be experiencing a slowdown, another industry, may be in full swing! To compliment what I was doing as a Business Analyst, I also took Business Analysis and Project courses via a company called Global Knowledge. I have obtained the Certification of CBAP® - Certified Business Analysis Professional I hope this write which include a short video of my background is helpful to you! Mike Holman New York Financial Careers Examiner

Wednesday, January 13, 2016

Author Michael Lewis discusses The Big Short and the future of finance

Author Michael Lewis discusses his book The Big Short: Inside the Doomsday Machine, the future of finance as he sees it, and his thoughts on whether today's business students have a chance at changing it. Part of the Dean's Speaker Series, co-sponsored by the Center for Responsible Business as part of its Peterson Series on Sustainable Finance. (September 13, 2010) The University of California Berkeley Haas School of Business is one of the world's leading producers of new ideas and knowledge in all areas of business - which includes the distinction of having two of its faculty members receive the Nobel Prize in Economics over the past 15 years. The school offers six degree-granting programs. Its mission is to develop innovative business leaders - individuals who redefine how we do business by putting new ideas into action, and who do so responsibly. The school's distinctive culture is defined by four key principles - question the status quo; confidence without attitude; students always; and, beyond yourself.

Get The Kindle Edition with movie tie in here

After thirty five years on Wall Street, what I believe was a critical part of the cause of the Financial Crisis has been told in a book by Michael Lewis, which is now a movie. "The Big Short": author Michael Lewis on 'betting on Armageddon' during the global financial crisis; making of star-studded new film. Read more at Here...

Friday, January 8, 2016

Bank Custody - The Sub Custodian Network

Within the Global Bank Custody space is a key component, The Sub Custodian Network. As a  Global Custodian, you can have the best systems and best people to manage the client space but if your Sub Custodian Network is weak, this can cripple your business.

The settlement of securities and cash is heavily dependent on your Sub Custodian Network. These are the contacts overseas that ensure that your Cash and Securities settle on time.

You may find that all of your trades (cash and securities) are failing in a foreign market. It may be a time to ensure that your Network Management team is evaluating the service being provided by your Sub Custodian Network overseas. The scorecard show continually low marks, it may be time to change your Sub Custodian. Another Sub Custodian may be settling securities and cash in a more timely manner than the Sub Custodian you are currently using.

Why is this important? You Custody Clients.  If your client does not have an Investment Manager, they may decide to move the business to another Custodian. If your client does have an Investment Manager they may have the Manager move the business to another Custodian.

Again, you can have best systems and people, but your trades are failing in one market and no steps are being taking at the Network Management Level, you can lose the business. The clients may not be satisfied with,  "Settlement is slow in that market", particularly if they have an Investment Manager and find that other custodians are settling their trades in that market on time using a different Sub Custodian.  Your task at the Custodian Level is the make the steps if necessary to change the Sub Custodian and communicate the change to the client before the issue reaches a level that causes the client to move the business away from you.

There can be caste strophic issue with a constant failing Sub Custodian in a particular market.  Quite often your clients depend on the proceeds of a Sale of a foreign security  to fund a potential overdrawn currency balance. If the sale fails, the currency account never get funded unless it's a contractual account that funds the proceeds whether or not the sale settles.  Even in this case you may have to claim the interest earned in the foreign currency back from the client as "undue enrichment" if the failing trade was due to the client and not the sub custodian. These scenarios may happen in any event, but why not make sure your Sub Custodian Network is strong to eliminate that ever being a question?

Have a Strong Sub Custodian Network with a Network Management team rating the timeliness of settlement along with communicating changes to Settlement Instructions is critical to the custody business.

By Mike Holman