The coronavirus pandemic was proof for many banks that working fully remotely is possible, but it has a downside impact too. Some bank executives are now voicing the need for employees to return to the office to maintain company culture, promote good behavior and ensure quality of work.

While some big technology companies like Microsoft Corp., Facebook Inc. and Twitter Inc. foresee large numbers of employees working from home permanently, things look rather different in the world of banking and finance.

In the week of Feb. 22 Goldman Sachs CEO David Solomon rejected the idea that home working would be the "new normal," saying that having staff at their office desks was an important element of its innovative, collaborative apprenticeship culture.

He is not alone in this opinion. While some banks may be open to more remote working in the future, there is still a widespread view among managers that staff should be physically in the office most of the time.

PwC's December 2020 Remote Work Survey found that 70% of financial services employers believe employees should be at their desks at least three days per week to maintain a distinctive culture.

In comparison, only 20% of employees in the survey wanted to return to the office for three or more days per week, showing a mismatch in expectations that will be a "big management challenge" for banks, said Bhushan Sethi, a global leader of PwC's people and organization practice who focuses on the financial services industry. While the survey was conducted in the U.S., he said financial institutions in the City of London are likely to face similar resistance.

"In some institutions, the leaders are saying they want to consolidate their office footprint and become a hybrid workplace," Sethi said in an interview. "But some of those leaders are also privately telling us: 'We have such a transformational change agenda; we need people in the office so that we can actually build that camaraderie and get it done.'"

Culture, connectivity

Across compliance and risk functions, bank managers are expressing concern over the toll that the current remote work environment is taking on culture and behavior.

ING Groep's behavioral risk management team, whose role is to assess habits and cultures that could be a risk for the organization, has seen a growing number of requests to investigate work-from-home-related behavioral patterns in the past year. It has found new trends such as screen fatigue, increased work pressure, communication challenges and lack of personal connectivity, which could hamper effectiveness and engagement of staff and ultimately drive compliance risks, said Mirea Raaijmakers, who heads up the team, in an interview.

Raaijmakers acknowledged that the pandemic has brought "tremendous" opportunities for more flexible and remote work, but said it also brought to light some limitations.

"We shouldn't fool ourselves by thinking that we can do this completely remote[ly]," Raaijmakers said. She is particularly concerned over the potential loss of the "connective tissue" between employees. This is fundamental to any bank's performance, innovation and compliance, but is currently under pressure, she said.

Meanwhile, Behavox, an artificial intelligence company that helps banks and money managers monitor staff communication, has found a "startling increase" in employee misbehavior and decline in morale as a result of prolonged working from home. In a recent survey of 3,000 corporate professionals across the U.S., U.K. and Canada, about half of respondents admitted that they were less professional while working from home.

The survey also revealed a prevalence of misconduct such as corporate theft and espionage, as well as harmful behavior like racism, sexual harassment and bullying. For example, 19% said they had intentionally broken the company's security policy, while 13% had been the recipient of a racist joke and 10% of inappropriate sexual-related communication.

Loss of cultural capital is the biggest risk faced by financial institutions in the current remote environment, more so than operational or financial risks, which are more tangible and can better be managed, said Emmanuelle Bury-Lucas, chief compliance officer for BNP Paribas' U.S. business, at a webinar organized by The Economist on Jan. 19.

When people are working together in the office, they naturally set an example for each other on how to properly interact with clients or treat colleagues, something that does not happen when staff are at home, Bury-Lucas said. As a result, the education on how to behave is "more diluted," she said.

That is especially true for new joiners who do not know the company's culture and practices well, Bury-Lucas said, adding that most conduct breaches during the pandemic have been carried out by people who have been with the company for less than a year.

Ensuring proper training and knowledge-sharing with new recruits is another challenge faced by banks in a virtual setting. According to Eleanor Gordon, head of Standard Chartered's financial crime surveillance unit, the initial training of new staff members during the pandemic has been "relatively straightforward," but the lack of the "vital face-to-face connection" means it takes longer to get staff up to speed, enabling them to become experienced analysts.

Speaking at the AML & FinCrime Tech Forum on Jan. 27, Gordon said she was concerned that the quality of financial crime operations could come under strain if the current remote environment is prolonged.

No 'one-size-fits-all'

As banks now face the challenge of getting staff back to the office, managers should first and foremost avoid designing their return plans as a "one-size-fits-all," said PwC's Sethi.

"Organizations that get ahead of this and start understanding needs and have bespoke return-to-office or hybrid work plans will be the ones that improve not only their workplace culture, but also other aspects of their employees' experience," he said.

Banks will also need to try to make sure people's time at the office are used to connect staff and do those crucial face-to-face activities that cannot be done remotely, while leaving the more heads-down work for people do to at home, said ING's Raaijmakers.

Importantly, the pandemic prompted banks to pay more attention to behavioral and cultural risks in a virtual environment, which banks will need to continue to focus on in the future.

"The virtual workplace is not going to go away together with the coronavirus," said Erkin Adylov, CEO of Behavox, in an interview, adding that many of the threats and risks tracked by the company are likely to exist regardless of the pandemic.

Not only should financial institutions be seeking to gain more visibility over virtual behavior that could pose a threat to their institution, they should also put in place measures to create a safe work environment virtually, just like they have in the physical office, he said.