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Role Of Operations In Finance Industry

The role and duties of an operations department depends on a particular industry and its size. The operation management develops internal policies and procedures to be followed and manages the operations staff. Operation manager helps to analyze the company´s finances, spending and manage other resources. In addition to its duties, the operation manager has to monitor the company´s performance and efficiently make improvements and address problems to the management. Operation department can also perform a number of human resources management (HRM) functions like assigning tasks, determining the requirements of the staff, setting employee priorities etc. Operation department generally works as a back end team and looks after the smooth processing and functioning of the day to day transactions to minimize the risk and maximize the quality of the service.

Operations Manager

Operation manager should have sound knowledge of different aspects of the business. Apart from good communication skills, operations manager must possess experience in strategic planning, team leadership, resource management and accounting. The skill set of Operations professionals is quite broad. Operation manager is responsible to coordinate the activities between all the departments within a company.

Over the past two decades, a significant amount of attention is given to research in service operations. Special issues of Production and Operations Management have focused on services in general.  Various researchers have presented blended theories, research plans, surveys on literature, strategic ideas and have discussed the value of studying service science as a new discipline. Particularly for financial services, few books and a special issue of Management Science have focused on the operational issues. However, financial services have still hardly been given any attention as compared to other service industries such as transportation, health care, entertainment, and hospitality. The focus is more on general distinguishing features which does not do much justice to financial services and especially when some of these characteristics are not central.

Here, we are more focused on financial services especially the firms in retail banking, commercial lending, insurance (other than health), credit cards, mortgage banking, brokerage, investment advisory, and asset management (mutual funds, hedge funds, etc.).

Importance of Financial Services

Financial service industry is an important part of the service sector where the economy is growing rapidly over the last few decades. The objective of these firms is to deal with originating or facilitating financial transactions. The transactions include creation, liquidation, transfer of ownership, and servicing or management of financial assets. This could involve raising funds by taking deposits or issuing securities, making loans, keeping assets in custody or company’s trust. Managing these assets to generate return, pooling of risk by underwriting insurance and annuities, or to provide special services to facilitate these transactions are also included.

Within financial services a vast variety of firms are characterized by unique production processes and specialized skills. The processes and skills required for banking are very much different from solicitations for credit cards, acquisitions of new insurance accounts, or the handling of equity dividends and proxy voting etc.

The financial services in our country account for about 84% of the total employment in the economy but only about 4% of this workforce is actually employed in financial services. This is quite surprising to some because the financial services transactions are present in one form or another in our lives.

Characteristics of Operations in Financial Services

Though every specialized department have special characteristics but there are several unique operational characteristics specific to the financial servicing industry. Mentioned above that this particular part of the industry is not been given sufficient attention. Below lists a number of these unique operational characteristics:

  • High volumes and heterogeneity of clients
  • Repeated service encounters
  • Long-term contractual relationships between customers and other companies
  • Customer sense of well-being closely knitted with services
  • Use of mediators (professionals from sales & credit department)
  • Convergence of operations, finance, and marketing.

The career in the division of operations in the finance industry is growing for both experienced as well as entry level finance professionals. The role in operations includes assisting in across all divisions of investment products, to ensure a smooth flow of information both from the front and back office processes. The support and a role of analyst are the most common positions for operations. The main responsibility of operation support role is to assist in trading desks and client servicing teams with administration and other processing activities. The operations analyst role is also involved in processing activities but instead looks more into research that how information moves throughout the organization and work to improve its efficiency and effectiveness. The analyst role is involved with how information is stored and physically processed within the company’s internal systems as well as to ensure that how it is communicated and reported to external parties.

Common activities in a trade support for operational roles:

  • Monitoring and controlling processes and payments
  • Data entry
  • Executing, clearing, and settling trades
  • Investigating “exceptions” or system failed trades
  • Ensure all internal and industry standards are upheld on a daily basis
  • Reconciliations

Common activities in client servicing support for operational roles:

  • Communicating directly with clients
  • Responding to client requests
  • Investigating inquiries
  • Data entry
  • Monitoring document processing
  • Gathering information from clients
  • Client on board activities
  • Ensure all internal and industry standards are upheld on a daily basis

Skills & Qualifications: Professionals who are interested in operation role as an operations specialist in financial services must hold a Bachelors Degree typically in Accounting, Finance, Economics or any other similar field. All operation professionals should be computer literate as most operational processes will require maximum use of internal systems to manage information in creating reports or models. Macros, Lookups, and Pivot Tables are the advanced skills used by exceptional operations professionals by using MS Office applications Access and Excel. Analytical thinking and following instructions are key traits for those interested in operations.

Specialities: Operations professionals generally deal with one specific area either of trade processing or client supports. Though, specialities can include various types of asset classes (Fixed Income, Commodities, Currency, etc.), settlement systems (SWIFT), specific activities (database management, reporting etc.) or even industry/geography.

Locations: As more regulations are created in the industry, there is a great need for operation professionals to ensure that processes are being followed and standards are being upheld as per the industry norms for the better and quality service. Typically institutions hire operations professionals for every location they operate. However now a days, many organizations are trying to centralize all operations processing into one facility.


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