Understanding Bank Operations
The banking operations department is a back-end team responsible for executing and settling transactions initiated by the front-end teams while ensuring adherence to risk or regulatory guidelines.
Almost every banking division has a shared or dedicated operations team assisting them with the actual execution of whatever transactions they initiate. Every team from investment banking to retail banking to corporate banking has operational teams of their own.
Ops teams are not just restricted to business divisions though. Even internal departments like HR, IT and risk management have their own operations teams. The operations department can be best thought of as a team which services other departments as if they were their clients.
The tasks performed in an ops role are totally dependent on which front or middle office team you’re supporting. So it might make more sense to highlight some of the main ops divisions individually and provide a brief desecration of what they do exactly.
The common thread between all of them is that ops teams exist to facilitate and execute transactions while ensuring that everything remains above board and within regulatory and internal guidelines.
Investment Banking Operations
As the name suggests, this team assists the front-end investment bankers with completing their transactions. This is usually further divided into a M&A and capital markets.
The M&A team helps with operational due diligence which includes looking at minute detail at the operational level that the front-end analysts and associates do not look at. It also includes technology aspects like data processing, maintaining and storing contracts and so on.
Trade Support Operations
This team assists the sales and trading desks with the execution and settlement of trades. It is one of the most active and stressful divisions because the trades need to be executed and reported on a real-time basis. It’s not only a processing job though, as trading ops can also provide analytics support to traders and assist in data analysis.
Despite automation, some work is still done manually. Once the trade is entered into the system by the trader, the be ops team has to book it, check it for any errors, reconcile it, address any errors that the system might throw up, update the profit and loss ledger for the trader on a real-time basis, ensure that the trades are reported properly to all parties including regulators and so on.
Corporate Banking Operations
This division does the operational work for corporate clients like assisting in KYC checks, issuing and transmitting trade finance documents to other banks across the world, maintaining contracts and other records, ensuring that clients’ accounts are operational from a backend perspective, assisting with ad hoc data requests and so on.
There is also some want of coordination required with third-party vendors or internal teams like risk, legal, sales, product etc. The team has to further ensure that all transactions adhere to credit policy, regulatory guidelines or any other internal thresholds.
Risk operations can have multiple subdivisions within itself like credit risk, market risk, enterprise risk and so on. However, in all cases, the main responsibilities are the same – monitor and report on all risk related factors.
The ops team has to ensure that established risk management procedures are being followed by the front-end team as they will be focused on client-side issues. There are dozens of risk management data systems that need to be operated on by risk ops teams.
Client Service Operations
The client services operations team provides support in the management of client queries. This includes things like documentation maintenance, storage and retrieval of records, maintaining client accounts and performing any special requests using core banking software etc.
With an ever-increasing array of complex products and services, these guys have to stay on top of complex databases and applications in order to assist in the delivery of customer service.
The tech ops team assists the technology and development departments with their tasks. For example, the technology team might be working on an automation or standardization project, and the tech ops team has to assist them by providing the necessary data from other departments.
Another example might be assisting the solution delivery team which is implementing a bespoke solution that integrates the client’s payment processing system with the banks online banking product suite.
Retail Banking Operations
The size of the retail banking operations team can be massive depending on how much work is outsourced. The team is responsible for everything from performing due diligence and adhering to KYC norms for new customers, loan processing, to even ATM or cash vault management and so on.
Mortgage and loan operations teams ensure that regulatory and control limits are being adhered to, pending disbursement are issued without delays, audit deliverables are being met, front-end teams and clients are getting what they need on time, operational risks are minimized and tasks of that nature.
The branch operations officer is based out of individual branches and assists in things like cash handling, opening and closing the branch, scheduling visits, handling couriers etc. Essentially everything that is necessary to the efficient working of the bank branch may be assigned to an operations specialist manager there.
This team handles all the internal operational work of the bank. This includes things like maintaining all compliance and regulatory records, assisting the internal finance department, compliance department, Treasury, and other teams with whatever is necessary for them to perform their role.
Large banks with thousands of employees have dedicated HR operations team which assists with payroll processing, leave management system, HR policy queries, new employee onboarding documentation and due diligence, maintaining the HR systems and things of that nature.
Qualifications and Skills
Diligence, commitment and self-motivation – Operations specialist are often required to perform repetitive tasks. While there undoubtedly is a lot to learn, the sheer volume of transactions means that a lot of them end up being very similar. In order to perform at your peak, you need to be self-motivated and committed to your job.
Often times, you will be working under tight deadlines and under stress from front-end teams to deliver as quickly as possible. It is important to maintain your focus and deliver accurate results on a consistent basis in order to succeed.
Good communications and teamwork – Even though operations is by definition a backend team, good communication is still essential. You will be dealing with front-end teams and other departments on a regular basis and working under tight timelines. You will also often find yourself in a situation where you need tell the front-end teams that something is not possible because it is breaching some guidelines or threshold. Being able to effectively communicate in such situations critical to success.
IT skills – Operations is a volume heavy department. You will likely be working on dozens of tasks at any given point and you need to use dozens of applications and internal software to make that happen. There is often separate software for risk management, workflow software, communication tools, document retrieval tools, interbank communication tools (like for sending SWIFT messages) etc. You need to be able to effectively use all of them and the better your grasp on technology, the easier it will be you to get your work done on time.
Role Specific skills – Since operations teams support some specific department, most of the skill requirements are based on that. For example, if you’re supporting the investment banking team, you need to have above-average analytical and technical skills and the ability to handle large amounts of numerical data. Similarly, risk management teams need to have superior quantitative skills and the ability to understand the impact and significance of each risk metric that they are tracking.
How to get into Banking Operations
The operations departments within banks are quite massive and therefore hire a lot of people each year. You need to be a graduate in a related field in order to be considered.
For example, if you’re applying for corporate banking, investment banking, risk management or trade support operations then you would be expected to have a business, finance, accounting or mathematics specialization. If you are instead applying for compliance related roles, then experience in law might also be considered beneficial. Computer science degrees will be helpful for tech operations and so on.
There are some certifications that are available for specific roles. Not all of them are particularly helpful or necessary but some of them do add value to your CV (like documentary credit certifications for trade finance).
Operations Career Resources
This small, curated list of resources will help you with getting into an ops role at a bank. Focus on your CV, understanding of financial concepts and soft skills.
|Resource Type||Resource Provider||Learn More|
|Best Bank Ops Certification||Brokerage Operations Professional Certificate from the New York Institute of Finance||Check Course Details|
|Best Bank Ops Certification (Advanced)||Professional Certificate in Operations and Compliance from the New York Institute of Finance||Check Course Details|
|Best Book||Financial Markets Operations Management||Check on Amazon|
|Recommended CV/ Cover Letter Writing Service||Resume Planet||Learn More|
Salary and Bonus
Operations specialists can expect to earn between USD 40,000 to USD 80,000 during their first few years on the job. The numbers are similar in the UK and Europe as well.
The variable component is smaller when compared with revenue generating departments since operations is a cost center for the bank. That being said, salaries generally tend to be much higher in financial centers like New York, London, Singapore etc.
Operations managers and other senior level staff can expect to earn more than USD 100,000 in a few years. Salaries tend to be higher in more stressful roles which require more skills like investment banking operations or trade support teams.
A Normal Day in Ops
Operation specialists and managers that are not working at the branch, should expect to spend the entirety of the day at their desks. This is not much different from what analysts in investment banking or corporate banking roles do for the first few years of their careers as well.
As an operations specialist, you will have a number of predetermined tasks that you will have to perform in a structured manner. There is not much room for creativity as the workflow is designed based on decades of experience with efficiency in mind. You will have access to special software, and you will have to make sure that the transaction is processed and executed within specified terms and timelines.
Ad hoc requests do come in from time to time. For example, some front-end desk might require you to pull up part of a contract from 10 years ago which is somehow needed for some reason today.
The work life balance in the operations team is pretty decent for the most part. More than 90% of the people in all ops teams around the world generally don’t expect to put in more than 50-60 hours a week.
However, there are exceptions. Ops teams supporting high-value front-end desks like M&A or capital markets can sometimes expect to put in an all-nighter when a major transaction is going through. The ops teams have to support the front-end with whatever is necessary and this means that you need to be at work whenever you are needed.
That being said, many operations teams also operate on multiple shifts. This becomes necessary because a centralized team might be supporting front-end offices in multiple time zones. If that is the case, then your work hours will be highly stable. But it could also mean that you are assigned to the secondary shifts.
Career Path and Progression
It is generally considered difficult to move from operations to front-office roles in the bank, but it is a lot easier to move between different operations teams and even moving to an operations team outside the banking industry.
Operation specialists and managers tend to stick to their divisions for the most part. Bank operations teams are truly massive and often account for the largest share of the bank’s total manpower.
What this means is that there are plenty of opportunities to get into a team leader position rather quickly. You also get to manage increasingly larger teams at a much faster pace compared to front or middle office positions.
Moving between back-office roles
It is also possible to move from one operations team to another. Although this might not necessarily lead to a significant salary hike, it does have the advantage of making your career more resistant to downsizing. For example, if one division is being downsized you can move to another operations team more easily than someone at the front office.
An increase in compensation is possible when moving to one of the more demanding ops teams like investment banking or trade support operations. Keep in mind though that you would be competing with fresh graduates and you would need to have the necessary product knowledge in order to make such a move.
Moving to middle office roles
The middle office is made up of teams like compliance, risk management, credit analysts, on-site IT implementation and so on. If you manage to develop a lot of functional expertise in one area, is entirely possible to move to the middle office.
If you do decide to move to a middle office role, you will likely spend more time in direct contact with the client facing teams. Middle office roles have slightly higher skill requirements and therefore are better compensated for the most part.
Operation specialists and managers are skilled at getting things processed and leading large teams. This provides you with a skill set that is applicable to industries other than just banking. This might not seem like a big deal at first, but the ability to move laterally can fast track your career as each such move may be accompanied with a promotion and a salary boost.
Most people do not take full advantage of lateral movements and stick to one company for far too long. Moving laterally every few years gives you more exposure and you will properly end up making a lot more than someone who is just sticking it out in one firm. It’s not something that everyone likes, but research suggests that it is indeed a faster way to grow.