What are operations jobs in banking? And why would you want one?
Operations deals with the core “plumbing” systems upon which the financial services business relies.
- Operations jobs are dedicated to ensuring the efficiency and the accuracy of each element of a transaction.
Operations jobs can be seen as less prestigious than client facing jobs like M&A or sales and trading, but Rodney Sunada-Wong, a former chief risk officer at Morgan Stanley’s broker dealer operation says operations jobs are absolutely critical to the way banks function. “Senior Management, Risk and Finance are the brain. Salespeople, traders and investment bankers are the muscles. Technology is the skeleton and bones. Treasury is the lungs. And Operations is the heart and circulatory system,” says Wong. “All the parts have to work together. The better and more efficient your Operations, the more profitable, and efficient your bank will be.”
The nature of your job in operations will depend upon the area of the banking business that you support. For example, if you work in securities operations and support the trading floor your role will involve the settlement, clearance, reconciliation and documentation processes associated with all the traded instruments (eg. equities or bonds). On the other hand, if you work in loan operations, you’ll be involved with all the administrative processes associated with the lending business from the time loan proceeds are dispersed to the borrower until the loan is repaid.
Similarly, investment banking operations jobs help with the running of the M&A and capital markets functions. Retail banking operations jobs are concerned with transactions involving individuals and are usually carried out at bank branches.
Operations jobs can also be known as “back office jobs:” unlike so-called “front office jobs,” you won’t be dealing with clients directly.
Operations jobs in securities businesses
If you work in an operations job in a securities business, you’ll be supporting the trading floor. These kinds of jobs cover processing functions that include but are not limited to:
- Clearance, the process of updating accounts of trading counterparties, matching buys and sells, and arranging for settlement (ie. payment).
- Settlement: the exchange of money and securities between the seller and the buyer on the trade settlement date.
- Trade confirmations documenting the specific commercial terms of a transaction to which the parties agreed, including pricing.
- Reconciliation: the process by which it is ensured that the buys match the sells and by which any errors are resolved, ensuring the validity of transactions.
People in these roles are expected to monitor existing processes and procedures. They’re also expected to create improvement and increase efficiency. In the US, most are sponsored by their companies to sit for the Series 7 and Series 63 securities exams.
Securities operations jobs have historically been some of the most numerous in investment banks, with far more people processing the activities of the trading floor than working in sales and trading. Much of what happens in the operations division is now controlled by technology, but human beings are still needed to help with exceptions when processes don’t run smoothly. Securities operations jobs are typically located away from large Western financial cities, where premises and people are usually less costly.
Much like broader securities operations jobs, if you work in FX operations you’ll be supporting processes associated with foreign exchange transactions within a financial institution. FX ops focuses on confirmation, settlement and reconciliation of cash transactions with internal and external clients for FX-related products.
Similarly, if you have a job in commodities operations you’ll carry out many of the same processes as in securities operations – but you’ll also have to deal with the idiosyncrasies of the commodities markets. People with jobs in physical commodities operations need an understanding of what’s involved in buying or selling an actual barrel of oil, for example.
Loan Operations jobs
Loan operations jobs ensure the accurate and timely operations of the bank's loan process. This includes: booking loans on loan system, maintaining loan documents, verifying and auditing key data elements (including financial, tax, and business information, assembling and maintaining credit files on borrowers) managing loan collateral, exception resolution, and performing regulatory reporting. The loan operations function also performs loan research to resolve problems associated with borrowers or transaction, and processes loan payoffs.
Loan operations managers design and administer procedures and systems. They also ensure that each stage of the loan process is carried out in accordance with federal, state, and local laws and regulations, particularly in consumer loans where errors can be very costly.
Investment Banking Operations jobs
Investment banking operations jobs are all about helping the front-office complete M&A and underwriting transactions. You might be involved in the due diligence surrounding a deal or working on the graphics of a pitchbook.
If you work in capital markets operations, your job will involve supporting the debt capital markets and equity capital markets units as they underwrite the launch of new securities. You’ll assist in data analysis, data presentation, documentation and due diligence and will ensure that the transaction proceeds smoothly. In many ways, your job will be similar to that of securities operations professionals. – You’ll work on client onboarding, trade capture, settlement and clearance, and general client support .
Retail banking operations jobs
Retail operations in a bank support the deposit-taking, lending, and payment functions the bank provides to individual clients. Here, compliance is doubly important and you’ll need to be very familiar with rules surrounding Know-Your-Customer (KYC), and Anti Money Laundering (AML), plus the Bank Secrecy Act (BSA).
Skills you’ll need for operations jobs in banks
Securities operations teams support a wide variety of products ranging from very complex, highly structured derivatives transactions to more plain vanilla trades. Operations people need strong product and industry knowledge to facilitate transactions and address any processing problems.
If you work in operations, you’ll also need to be a strong communicator. Operations professionals deal with everyone from traders to auditors to investment bankers and need to describe complex processes in simple terms. They also deal extensively with other control functions, including compliance, credit, market risk, and technology.
Increasingly, technical skills are also a critical part of the operations skillset: operational processes are largely controlled by complex technology systems and even if you’re not coding these systems yourself, you’ll need to understand them.
Operations careers can progress along several different paths. Many operations professionals find that they are called upon to broaden the scope of their activities as they progress. Others become specialists in a particular aspect of the operations process like settlement, clearance or project management. Some move into the front office in areas like sales and trading (although this can be a tough move to make).
The author acknowledges the following sources:
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