The Transformative Forces in a Bank's Middle and Back Office

27 September 2023
Rik Coeckelbergs Managing Director of The Banking Scene Connect on Linkedin

Bank Operations is a general term for a variety of activities in the middle and back offices, ranging from Treasury & Financial Markets, Payments & Accounts, Credits, Securities, and more. Their support is essential to properly manage the banking activities, and Operations is considered a key actor for change.

Rik Coeckelbergs from The Banking Scene spoke to Olivier Heindryckx, Practice Lead Operations at TriFinance, to better understand the waves of change these departments undergo as part of the general transformation of the banking industry.

You can read the full article on the website of The Banking Scene.

To the article

The Middle and Back Office: The Backbone of Banking

These are the main thoughts that Olivier and Rik dove into.

  • Workload Distribution: The evolution of straight-through processing over the past decade has shifted workloads, with machines handling routine transactions. Skilled experts now focus on exception management, requiring analytical and problem-solving skills.
  • Regulatory Demands: The increasing regulatory pressure means that operations personnel must have a deep understanding of regulations like MiFID, FATCA, KYC/KYT, and more, to facilitate communication with compliance departments and customers.
  • Customer Expectations: Clients now expect quick online responses, posing a challenge for mid-size and small banks, which still rely on manual processes for certain tasks.
  • Operational Risk: The importance of operational risk management is highlighted by past incidents like the Jérôme Kerviel case, which originated in the back and middle office.
  • Outsourcing Challenges: Banks often outsource tasks for cost reduction but may experience quality issues, increased operational risk, and reputational damage. Some institutions opt to insource tasks as a result.
  • Future Trends: Advancements in AI technology, robotics, and automation may reduce the outsourcing of basic tasks to lower-income countries, enhancing cost efficiency and maintaining local control over exceptions.
  • Third-Party Partnerships: The banking sector is shifting towards proactive, structural partnerships with third-party providers like TriFinance. These partnerships help bridge talent gaps and manage workload fluctuations.
  • Talent Retention: The industry faces a challenge as experienced middle and back-office personnel approach retirement. Attracting and retaining new talent requires demonstrating the evolving nature of these roles, highlighting career opportunities, and emphasizing the importance of analytical and problem-solving skills.

In conclusion

In conclusion, the banking industry has undergone significant changes in the middle and back office over the last decade due to various factors. While productivity has improved, the shortage of experts remains a challenge. Future success in these departments will depend on adapting to evolving roles and attracting the right talent.