When the UK entered lockdown on 23rd March, all office-based industries experienced a substantial shift in their working practices and the Financial Services industry was no exception. Before the pandemic, 56 per cent of workers in banking, finance and insurance had never worked from home, but with only a limited number of designated key workers permitted in the office at the peak of the lockdown period, COVID-19 has redefined what banking work can be carried out remotely.

The forced experiment in remote working has resulted in operational success for many banks and their focus has now shifted to consider how they can adapt their ways of working to sustain, long term, the value it has created.  As restrictions start to ease and firms prepare to reopen their offices, many executives believe their firms will embrace a hybrid model that combines working in the office and working remotely.

In this article, we explore how banks that embrace flexible working, will not only increase employee satisfaction and engagement, but also positively affect productivity and also accelerate their Environmental, Social and Governance (ESG) commitments further.

Lessons learnt from lockdown

Although there had been an increased uptake in flexible working arrangements over recent years, many managers remained fearful that issues with controls and compliance would arise if they could not monitor direct reports in person. As a result, most Financial Services firms did not prioritise a broad implementation until the pandemic made working from home a necessity.

The initial transition was unsurprisingly turbulent, with many banks encountering technical issues and equipment shortages. However, most firms quickly overcame these and continued to execute trades for clients and provide liquidity in a stressed market. Even the stock exchanges reported no outages in March, despite daily volumes hitting up to c.16 billion shares per day. Certainly, most banks saw their non-financial risk profile increase sharply due to lockdown and many are still adjusting their control frameworks to tackle data protection issues arising from employees working with sensitive information in shared houses and operational risks caused by home distractions.

While it is hard to separate fully the work-from-home experience from the pandemic experience (lockdown, social distancing, isolation, childcare in parallel to work, etc.), it is increasingly apparent that many workers are in favour of maintaining some flexibility with regard to remote working arrangements even once the pandemic ends. Certainly, there are several advantages for banks in doing so. Research has shown that offering flexible working can lead to fewer sick days, higher employee morale and improved retention and collaboration. Higher levels of employee engagement can, in turn, boost client experience as motivated employees build stronger client relationships. 

Despite the difficulties of the pandemic, many employees have reported that remote working has had a positive effect on both their work and lifestyle during this time. For those working in financial centres such as London and New York, lockdown has granted a temporary relief from the daily commute and many have been more efficient without office distractions. For others, the greater flexibility afforded to them by working remotely has meant they are better able to balance work with other aspects of their lives, such as childcare and exercise.

The ESG benefits for flexible working

If banks are serious about embracing ESG principles, then embracing flexible working should be a key part of that strategy. The City of London Corporation policy chair, Catherine McGuinness, has pointed out that offering flexibility will help firms improve their diversity and inclusion, saying, “there are positive changes regarding flexible working arrangements and child care that can be made to help ease the burden of office life which too often falls disproportionately on women”.

While women would be obvious beneficiaries of flexible working arrangements, an LSE study has shown that offering flexibility to both sexes is key to closing the gender pay gap, noting that an often-overlooked factor driving many women to quit their careers is the incompatibility of workplace conditions with their partners' working hours and their family life.

Another important benefit of employees working remotely during the pandemic has been a reduction in global carbon emissions, which decreased by 17 per cent in early April (compared with 2019 levels) when significantly fewer workers were commuting to the office. Extending remote working after the lockdown will not only lead to a sustained reduction in commuter traffic and pollution, but banks will also be able to limit their emissions by cutting back on international travel in favour of using video conferencing/virtual collaboration tools.

The impact of remote working on banks’ carbon emissions targets goes much further than just travel. For example, whereas offices regulate temperatures and automate lighting in order to accommodate the needs of many, individuals working from home can restrict their individual power consumption much more easily. As a result, a study by Sun Microsystems suggests that an in<!--[if !supportFootnotes]-->dividual who works from home consumes half the energy of an office worker.

By having fewer employees on site, banks will require less energy to regulate temperatures and power lights, thus enabling them to reduce their fossil fuel consumption significantly. Indeed, research suggests that if all office-based employees across the globe worked from home for half of the week, this could reduce carbon emissions by 54 million tons per year.

Since many firms are reversing ESG initiatives such as bans on disposable cutlery in order to reduce the risk of spreading the virus between employees, it will be all the more important for banks to extend flexible working arrangements post COVID-19 if they want to maintain their commitment to ESG. 

Making it work

Remote working is not suited for everyone and some workers have struggled to remain productive during this forced experiment. Many of the difficulties faced will have been specific to the pandemic context, like trying to balance childcare alongside full-time work or, conversely, coping with social isolation. However, there remain some other barriers to a broader adoption of these arrangements in the longer term, which banks must first work to address.  

One such challenge pertains to employee learning and development. For many firms, the move from classroom-based training to eLearning has been relatively simple and overall, successful. Certainly, it is likely that much of this could remain virtual going forward. Ensuring effective on the job training and organic learning however, which is particularly important for junior talent, has proven trickier to manage remotely. Indeed, while the FCA has permitted those with exceptional circumstances to carry over uncompleted CPD hours to 2021, it has clearly specified that employees must remain competent to carry out their work. As a result, managers and their direct reports will need to work on a case-by-case basis to ascertain the optimum level of in-person contact that is required.

Under COVID-19, it has proven possible to nurture client relationships through digital channels, and as a result, it is possible that individuals in front office, client-facing roles could be afforded greater flexibility in their working arrangements post-lockdown. However, this will only be made possible if banks make technology investment decisions over the coming months that support this. Certainly, front office executives will need to revisit sales models and review how they have been interacting with clients and investors during the lockdown to understand how they can leverage some of the omnichannel and ecosystem strategies employed in retail and commercial banking. Employing the right collaboration tools and technology to facilitate strong client relationships remotely will be crucial to allow flexible working to succeed as we leave lockdown.

As executives look to develop and roll out the new ways of working, inspired by some of the positive lessons from the forced lockdown, the main focus will need to be on creating environment and infrastructure that supports a hybrid workforce with seamless ability to operate from the office or remotely. This will need to consider everything from technology and tooling, to processes and controls, to governance, and also culture and performance management.

More than just a sticking plaster solution

The successes of the experiment in remote working have proven to both banks and their employees that flexible working can be more than just a sticking plaster solution for the issues caused by the pandemic. Now, in order to realise the benefits of flexible working arrangements in full, banks must continue to put employee wellbeing and engagement at the core of their business. COVID-19 has reinforced a previously growing expectation in society that an employer has a duty of care to protect the physical and mental wellbeing of its employees. Employees will expect continued investment in their wellbeing far beyond the end of the pandemic. 

Moreover, the reality of climate change is undeniable and banks must adopt business practices that will help preserve our planet as a matter of urgency. Before the pandemic, remote workers contributed to a saving of 3.6 million tons of greenhouse gasses each year in the United States alone, which is the equivalent of planting 91 million trees. With less than twelve years to a point when a predicted three per cent temperature rise risks causing irrevocable damage to the earth, the opportunity to make an impact and a difference is now.

COVID-19 has let the genie out of the bottle and banks must embrace the change. Stakeholders expect more than just financial returns. While in the very near future flexible working will be seen as a differentiator for attracting talent, the day is not far when the unavailability of it will become a detractor.