{"id":1719,"date":"2020-04-14T18:59:37","date_gmt":"2020-04-14T18:59:37","guid":{"rendered":"https:\/\/resources.velox-global.com\/?p=1719"},"modified":"2020-06-20T10:30:16","modified_gmt":"2020-06-20T10:30:16","slug":"the-coronavirus-pandemic-is-changing-the-way-finance-works","status":"publish","type":"post","link":"https:\/\/resources.velox-global.com\/index.php\/the-coronavirus-pandemic-is-changing-the-way-finance-works\/","title":{"rendered":"The Coronavirus Pandemic is Changing the Way Finance Works"},"content":{"rendered":"\n

by Walter Peczon<\/a><\/p>\n\n\n\n

Finance evolves.<\/p>\n\n\n\n

Like a virus, the financial services\nindustry is continuously evolving, and it took the natural evolution of the\ncoronavirus genome to spark global attention. <\/p>\n\n\n\n

For viruses and financial services firms,\nthe survivability through this natural selection process is what shapes the\nglobal economy and society.<\/p>\n\n\n\n

The evolution of coronaviruses to its\ncurrent form COVID-19 continues to be a tragedy for millions of people around\nthe world. In fact, coronaviruses have been around for a long time \u2013 possibly\neven centuries. Some of the older strains include alpha coronaviruses, beta\ncoronaviruses, and more recently, strains over the past ten years have included\nSARS coronavirus, and MERS coronavirus. They have mutated to crossover from\nanimal to human infections at a rate that has alarmed many scientists.  <\/p>\n\n\n\n

Contrary to what some conspiracy theorists think, research has shown that the recent strain COVID-19 was not manufactured in a laboratory<\/a> for diabolical purposes but instead has evolved naturally to become one of the most infectious and deadly of all modern pathogens. With the rapid globalized spread of this virus, we can define COVID-19 as the current \u201cKing of all Human Pathogens\u201d. And all of humanity must now learn to yield to its power and become prudent to adapt our normal ways of living to avoid the further spread and evolution of this deadly disease.<\/p>\n\n\n\n

The evolution of finance has also evolved over centuries to appear in its current form. There was once a time when people opened passbook savings accounts at their local savings bank. They would deposit cash at the bank teller window, and the teller would hand-write a ledger entry into the depositors’ savings passbook. When you saved enough, maybe the cashier would direct you to purchase a CD or even a mutual fund. Fast forward to today where investors open investment accounts via their mobile device, transfer funds into that account instantaneously, and then purchase 0.25 shares of Google stock.  <\/p>\n\n\n\n

The evolution of finance and the financial services industry has brought an immediate cause and effect to the financial markets, where the ordinary consumer can actually make real and meaningful investments almost immediately, and the effects of their investment movements as a whole have a direct effect on the global financial markets.<\/p>\n\n\n\n

As we consider comparisons of the rapid evolution of viruses and the finance industry, can we also draw conclusions of how one factor impacts the other in the midst of our current pandemic?<\/p>\n\n\n\n

<\/p>\n\n\n\n

Four Factors of How COVID-19 Will Impact the Evolution of Our Financial Industry<\/strong><\/h2>\n\n\n\n
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Photo by\u00a0Anna Shvets<\/a><\/strong>\u00a0from\u00a0Pexels<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n

Brick and Mortar Businesses Yield to Online Business<\/em><\/strong><\/h3>\n\n\n\n

As the outbreak continues to spread,\nnumerous sectors in the finance industry are becoming increasingly affected. Vendors\nare struggling to support a functioning payment system, banks are modifying\nantiquated policies to allow people access to their assets, and brokerage firms\nare rushing to assist worried investors in stabilizing their fragile\nportfolios. Whichever the case may be, teams are rapidly learning just how\ndestabilized the financial system can be when a major event similar to the 2008\nmarket crash occurs. <\/p>\n\n\n\n

We\u2019re seeing a shift in consumer behavior for investment management. Traditionally, if a person wanted to invest in assets, they would coordinate with a financial advisor to build a dynamic portfolio that aligned with their long-term goals and needs. With the outbreak of COVID-19, the process of physically meeting with an adviser has seemed to slow as the popularity of robo-advisers<\/a> appears to attract a wider audience. Since roboadvisers can be remotely accessed from home, the complexity of having to coordinate with a traditional financial adviser is no longer the standard. Aside from having a library of knowledge through the internet, investors can safely manage their portfolios without the risks associated with being exposed to COVID-19. <\/p>\n\n\n\n

Due to their simplicity in access, ease of use, online accessibility, and the ability to educate the user, a roboadviser platform alleviates any health concerns that anyone might have. This means that a shift in consumer behavior, for people to favor roboadviser platforms, is most likely. The survival of brick-and-mortar<\/a> financial advisory firms is teetering between success and failure as customers scale back reliance on traditional advisory, are focusing on basic essentials for their livelihood, and are migrating to digital investment platforms, pushing accelerated challenges onto advisers to fill that gap. Aside from having to strengthen their balance sheet, financial advisers will need to differentiate their business through digital customer service and unique selling propositions \u2013 a move that may reinforce customer trust and loyalty.<\/p>\n\n\n\n

<\/p>\n\n\n\n

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Photo by Alesia Kazantceva<\/a> on Unsplash<\/a><\/figcaption><\/figure>\n\n\n\n

Harder and Farther: How Operations Teams Manage<\/em><\/strong><\/h3>\n\n\n\n

As work environments change and new\nregulations are enforced by local governments, businesses in the finance\nindustry have had their routines greatly impacted. The new\n“stay-at-home” procedures imposed by cities and states are forcing\nteam members in the operations department to keep the business moving amidst\nthe global virus.<\/p>\n\n\n\n

This is a huge undertaking for\noperations teams, as they are tasked with providing reliable structures for\ncustomers through controlling costs and maintaining steady performances \u2013 major priorities for financial service<\/a> institutions facing the fallout from the coronavirus pandemic. The\ncommitments made by these firms provide a facilitated effort despite the\ncircumstances, adapting to the new labor climate and overcoming newfound\nobstacles.<\/p>\n\n\n\n

The costs associated with these new adjustments (such as buying\/building new tech, hiring additional expertise, or the price tags linked to reporting and compliance) are challenging many institutions at a time when risk is steadily increasing and balance sheets continue to shrink. However, this cannot be said for everyone, as some businesses are evolving and implementing new strategies to cope with the crisis. <\/p>\n\n\n\n

“I think the most important thing during any of these times is you need to have a stable system that won’t go down for your customers,” says Michael Higgins, Velox Clearing<\/a> CEO. <\/p><\/blockquote>\n\n\n\n

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Photo by\u00a0cottonbro<\/a><\/strong>\u00a0from\u00a0Pexels<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n

Productivity Shifts in the Home-based Workplace<\/em><\/strong><\/h3>\n\n\n\n

Working “remotely” has been an\nexperimental practice for some businesses in the United States. Usually\nreserved for positions such as contractors or consultants, the “working\nfrom home” mindset received a big (and legally mandatory) push from\nCOVID-19. Even before the virus became a reason for people to stay home,\nincreasing numbers of individuals have been saying goodbye to their tedious\ncommute to work by acknowledging the advantages and responsibilities of working\nfrom home.<\/p>\n\n\n\n

This system of productivity is a\ndifferent reality for those in the finance industry, coping with the difficulties of working away from the job<\/a> headquarters and communicating with vendors (or clients) while\nunderstanding how to optimize their new office environment.<\/p>\n\n\n\n

It’s important to ensure that you are\nset up to be productive, as this includes having a designated workspace with\nthe right equipment. Thanks to ever-evolving technologies like Skype, Facetime,\nSlack, Zoom, and cloud computing \u2014 not to mention texting and email \u2014 it’s no\nlonger necessary to be in an office full-time to be productive. In fact, many\nkinds of work can be done just as effectively, if not more so, from a home\noffice. <\/p>\n\n\n\n

Setting time aside to manage your core responsibilities away from an office desk is also key. Although you must avoid potential disruptions that come with aligning a new work schedule, you must also allow for the social contact and stimulation that ordinarily comes from being in a workplace with others. <\/p>\n\n\n\n

“We’ve been busy working hard for our users and doing that with young people via the internet has been a challenge all on its own,” says Kelly Korshak, CTO at iFlip Invest<\/a>. “Although it’s a different work environment than what I’m naturally used to, it’s a learning curve that I’ve acclimated to very quickly \u2013 working efficiently from home while managing my family needs productively.”<\/p><\/blockquote>\n\n\n\n

For institutional managers and brokerage firms, this new reality has also created a standard process for procedures and work structure. For example, if your position relies on predicting trends in the stock market and managing algorithmic solutions to generate performance, a quantitative trader may offer the perfect opportunity for telecommuting in the finance industry. This process may allow you to work with an extremely flexible schedule as you typically operate within the opening and closing hours of the markets. However, the perks of trading from home does come with a few warning labels, as you’ll need to establish a reliable internet connection to execute trades from your analytical software or have a dedicated back-office team<\/a> to support your workflows.<\/p>\n\n\n\n

<\/p>\n\n\n\n

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Photo by\u00a0Lukas<\/a><\/strong>\u00a0from\u00a0Pexels<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n

Financial Services Firms Need to Reinvent How to Make Money<\/em><\/strong><\/h3>\n\n\n\n

With investors on the edge due to the\ncoronavirus, investment advisory firms have been hard at work conceptualizing\nnew ways to attract clients, or in some cases keep the existing customers they\nhave.<\/p>\n\n\n\n

Gone are the days of charging clients a\ncommission for a trade.  The new\nevolution of finance has shifted strategy to give transactions away for free,\nbut then figure out how to earn revenues in other means such as banking\nrevenues, order routing revenues, or other means.<\/p>\n\n\n\n

As revenues for some broker-dealers are falling 28% (from their recent record highs in February), firms are steadily moving to charge clients fees based on assets rather than transactions \u2013 a move that is aiming to counterbalance the loss of income<\/a> as a result of last month\u2019s interest rate changes by the Federal Reserve. Couple that with the ever-growing popularity of roboadvisers, and you start to see a few noticeable patterns that broker-dealers are taking notes on.<\/p>\n\n\n\n

Pioneers of the robo-advisory platforms have mentioned that account sign-ups are about 68% higher since the downturn began<\/a>, with other roboadvisers reporting a first-quarter increase of 25% from a year ago \u2013 a signal that March has been its strongest month for account growth. It\u2019s difficult to pinpoint what exactly is responsible for those new sign-up increases since some new accounts could merely be clients switching from other robos. One possibility is that non-investors are spying a trend amid the pandemic selloff and are opening investment accounts for the first time, claiming valuable stock positions that weren\u2019t fathomable when the markets were doing great in February.<\/p>\n\n\n\n

The growth of roboadvisors during this\ncrisis presents a unique opportunity for broker-dealers and investment advisers\nto take advantage of the rising sign-up trends. With new and young investors seeking\nleadership from a platform that offers resources and investing insight, digital\nadvice applications are projected to successfully cope with the market\nvolatility linked to the recent activity driven by coronavirus fears.<\/p>\n\n\n\n

While this global pandemic and economic crisis has impacted every home, our focus as an industry should be to provide a seamless and exceptional customer service <\/p>\n\n\n\n

The financial services industry is\nnavigating through uncharted waters, balancing the need to serve the customer\nwhile taking measures to protect the health and safety of the public. During\ntimes of adversity, working together is what counts, and that statement has\nnever been truer for the financial services industry. <\/p>\n","protected":false},"excerpt":{"rendered":"

by Walter Peczon Finance evolves. Like a virus, the financial services industry is continuously evolving, and it took the natural evolution of the coronavirus genome to spark global attention. For viruses and financial services firms, the survivability through this natural selection process is what shapes the global economy and society. The evolution of coronaviruses to […]<\/p>\n","protected":false},"author":3,"featured_media":1761,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[13],"tags":[113,114],"jetpack_featured_media_url":"https:\/\/i1.wp.com\/resources.velox-global.com\/wp-content\/uploads\/2020\/04\/shutterstock_1160128927.jpg?fit=5400%2C3600&ssl=1","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p8AEHO-rJ","jetpack-related-posts":[{"id":1822,"url":"https:\/\/resources.velox-global.com\/index.php\/the-impact-of-covid-19-on-broker-dealers-and-where-it-hurts\/","url_meta":{"origin":1719,"position":0},"title":"The Impact of COVID-19 on Broker-Dealers (And Where It Hurts)","date":"May 29, 2020","format":false,"excerpt":"by Michael Higgins, CEO of Velox Clearing It has been a long and grueling 3 months since the first COVID-19 case reared its head in the United States. 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