Back Office (a.k.a. Operations)
Back office refers to sections of an office (it mostly refers to a division in an investment bank) which support the front office – the departments that generate revenue and bring in the bacon for the bank. You may also hear it referred to as ‘operations’. We’re talking HR, technology (in a support sense), clearing and post-trade services, regulation, accounting and administration.
Back office doesn’t have the pressure cooker reputation of front office roles. The hours for this job type tend to be more regular, but that doesn’t mean to say the front office lot do all the hard slog and the back office crew can just sit back…there’s always plenty of work to be done and tight deadlines to meet. If the back office crumbles and doesn’t stay on top of the processes to see through transactions, keep networks, systems and equipment running and ensure everyone happy in their jobs then the whole bank could collapse!
Back office: the spinal column of a financial organisation…
Here are a few of the vertebrae that make up the back office:
If you’ve read about technology in the Investment Banking section of the AllAboutFinanceCareers Industry Breakdowns, you’ll see that technology roles are increasingly breaking into front office positions too. But there is still that essential IT department in the back office that develops and maintains all of the bank’s day-to-day technical equipment and communication systems. Cyber security also forms part of the back office.
If there’s a system crash, the results can be disastrous, so this department has to work hard to minimise the chances of this happening and, if it does, then solve the problem and get it fixed as soon as possible!
HR departments interact with employees of all levels across the business. They’re on hand to make sure operations don’t fall apart from a people perspective, in the sense that staff are kept motivated and are fully aware of standards and regulations. They keep administration ticking over like payroll and employee benefits.
Risk analysts may not be the ones who actually seal the deal when it comes to transactions, however the information they derive from their quantitative analysis of various data, whether it’s to do with credit risk (the risk that borrowers may not be able to meet loan repayments), market risk (risk levels associated with losses relating to political, social and economic events that impact the markets) or operational risk (risks to the business incurred by internal systems and processes), has a massive impact on the moves the front office traders and salespeople make. They are constantly on hand to provide their advice.
Clearing, settlements & reconciliation…
Operations analysts conduct clearing and settlements – a major back office function. Essentially, these are the processes that tie up a deal: Once a transaction has been completed (the glory of a goal being scored), behind the scenes the back office swings into action and carries out various procedures to make sure all stages of handovers and payments are conducted properly and smoothly, transfer of ownership is completely accurately and that everything to do with the transaction is ‘reconciled’ (documented) in the right manner.
Operations analysts with the largest investment banks can also get the opportunity to jet off across the world to facilitate deals in international offices too!