For many companies (and people), living through the pandemic has been their first experience with something so truly unpredictable and disruptive.
And now, as we approach the second anniversary of the start of the pandemic, we thought it would be the right time to look back, recall what we have learned, and consider how we can be better prepared for the next disruption.
What we’ve learned between 2019 and 2021
Before we dive into planning for the future, let’s reflect on the insights that the pandemic has given us.
- Technology should be a number one priority regardless of the industry.The IT sector is one of the fields believed to have experienced minimal disruption during the pandemic. And one of the reasons is the intensity to which technology is used there. If we think about team collaboration, data security, and process automation, they all are made possible and better through software and hardware solutions.
- Remote is a necessity, not a privilege.Besides a small percentage of companies, most businesses were firmly against that idea, even if working remotely was theoretically possible.
When 2020 happened, most companies had to readjust their approach and are now enjoying the benefits: they can hire talent from any location, and the fixed costs of the business (i.e., office space, electricity, and water bills) have gone down.
- Those who don’t adapt don’t survive.
Change management has been a hot topic since the early 2000s when it became clear that the pace of the world was only increasing. Throughout the last couple of years, it was open-minded and flexible brokers with quick reactions who thrived even in these challenging times.
Can we really prepare for the unexpected?
The idea of an unexpected event is that it comes as a surprise. The logical question then is whether it is possible and makes sense to spend time preparing for something ambiguous that might never even happen.
The reasoning behind working on business continuity plans (BCPs) and brainstorming potential risks is simple. Brokers cannot think of everything and prepare for every single scenario. However, by figuring out the strengths and weaknesses of their business, they can:
- Identify risks that can be prevented and work out a step-by-step plan.
- Mitigate the risks that cannot be avoided altogether.
- Draft up a recovery and restoration plan for the risks that can’t be prevented or mitigated.
Having a plan in place for any natural or manufactured disruption helps brokers avoid panic and act quickly before more damage is caused to the business. Even if the next disruption is nothing like what we’ve expected, there is still a good chance that parts of our plans and initiatives will apply and help make the best of the situation.
Taking action
It’s too late once the disruption happens, so brokerages should act now and address their weak spots before they become a problem. There is no right or wrong way to do it, and we’ve prepared a list of tips that should help any broker on their way to securing business continuity.
Evaluate your current state
Take time to look at the business processes and numbers. Is your brokerage where you want it to be? What is stopping you from reaching your goals? Engage your teams in brainstorming sessions and ask for their input.
A SWOT analysis is a common tool to run such activities, as it helps brokers instantly spot what is going well for them and what is not. Once you are done with the SWOT, think about how you can replicate these success cases across the company.
For example, you deployed a powerful liquidity bridge that is fast, reliable, and automates a lot of tedious tasks. One of the options would be to list the departments that lack advanced technology and work on upgrading them.
List your potential risks and create a plan
With the threats already defined through the SWOT analysis, you can expand the list by adding the risks not associated with your company’s current situation.
For brokers, it can be a sudden change in regulations that forces brokerages to need a costly license or having your Data Center destroyed by the fire.
The action plan would be, for example, to host your data with a technology provider who ensures data availability and to look for alternative locations to register the company.
Diversify your business
Every broker knows that you are not supposed to put all your eggs in one basket. Yet, it is very tempting and comforting to focus on those services and target audiences who perform best for us.
Unfortunately, this is a very risky route, considering how quickly things change in the trading world.
Let’s say you are a retail broker who works with the Forex market. To diversify your portfolio, you can launch a money management service, for example, via a PAMM solution.
It would still be trading within Forex, but you will reach a new target audience - inexperienced traders looking to join the market. Alternatively, you can expand your asset classes and reach new clients who are not interested in currency trading. Both scenarios decrease the financial risk.
Invest in technology
A broker’s business today largely depends on technology. Traders want fast and accurate quotes; large volumes of data require powerful infrastructure and even the slightest delay is intolerable.
Still, it is a typical case for brokers to postpone further investment in automation and advanced solutions. And while it can be fine for a little while, things can go downhill fast once an unexpected event occurs.
Look at what could be upgraded, automated, or discontinued in the company. For example, if you don’t have automated trading alerts, then you are in the dark about what the traders are doing.
Without Business Intelligence solutions, the brokerage can’t run internal and regulatory reports whenever they’d like. That means lacking insight into internal processes and having to hire expensive consultants to provide all the reporting.
Automated end-of-day reports free up hours of your time and reduce the chance of error.
Find a technology partner that you trust
No man is an island. Having a reliable technology partner can make all the difference for the broker. To find the right partner, look at their current solutions, where the company is going, and their ethics and reputation.
A trusted partner will listen to your needs and find the right tools for you.
Looking critically at your brokerage and working on making it better can be intimidating and scary. However, you will inevitably have to change your approach at some point, whether through a major disruption or a market evolution.
It is always better to be one step ahead, and you can get there by facing your good and bad sides and making the change.
This article was written by Albina Zhdanova, Chief Operating Officer at Tools for Brokers.
