The whole industry has been pondering this strategic question for months, but according to an interview with Dan Pinto, JP Morgan has come to a decision – working from home, at least part of the time, is going to be a “more or less permanent” feature of their investment bank’s model. The “rotational model” is going to have JPM bankers working “one week a month from home, or two days a week from home, or two weeks a month”, depending on the type of business.
There is, of course, a pretty big difference between two days a week and two weeks a month, in terms of how you organise your life and commute. It’s not clear at what level the decision is going to be taken; whether it will actually be based on an objective centrally planned assessment of the client and market needs, or whether this just means “what suits your MD the best”. But it’s clear that JPM is committing seriously to the model – Mr Pinto says that the bank will be reorganising its real estate, occupying less physical space and reconfiguring what it does have to optimise for hot-desking. It’s also going to be spending money on a lot of monitoring and remote supervision technologies.
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Not only that, this might mean the end of Basingstoke. As JPM moves its computing into the cloud, the idea of a “backup” becomes more of an abstract concept and less of a physical cabinet full of tapes. And Mr Pinto noted on the call that “if people can work from home very effectively, you don’t need to have recovery sites”. We never got to the bottom of why it was that a few dozen JPM employees had to be shifted into furnished apartments in suburbia for such a long time, but it seems that once the new model is fully implemented, that won’t have to happen again.
So the question now becomes – will other banks follow suit, and if so, how quickly? JP Morgan is often a trendsetter in the industry, but everyone has to make their own decisions to make and it’s a difficult tradeoff. Roughly speaking, on the one hand you have a potentially very significant saving in real estate expense and on the other hand you have a compliance and control risk of unknown proportions. As well as how far a bank is advanced in cloud computing and remote access in general, risk aversion, cost pressure and old fashioned top management prejudices are likely to play a part.
On the other hand, although not every bank is likely to go fully down the “rotational model”, it seems increasingly clear that there will be a change in the availability of home working options. Coronavirus might not be here forever, but it is likely to persist long enough to justify new investments, so all banks will need to maintain the infrastructures to allow a quick shift to remote working – JPM themselves have had to shut down a floor in Sydney for deep cleaning after an employee tested positive. And if the option’s there, people will want to use it.
Daniel Davies – Read more on efinancialcareers.com