In the current tech-driven landscape, stemming from virtual interaction continuing post-pandemic, counterparty relationships are being bolstered again to increase collaboration and strengthen market resilience according to panellists at the Fixed Income Leaders Summit.
Idea generation, market research and market colour are gained from sell-side institutions, which are then fed back into the buy-side, said one panellist, something which is less achievable virtually.
During and post- the Covid pandemic, the emergence of virtual conferences has seen a significant uptick. But panellists argued this has had both pros and cons. Despite the benefits of these virtual interactions – most notably the frequency in which they can take place and the removal of travel barriers – panellists argued that they are not as effective as in person meetings.
“With a virtual meeting, you can find yourself multi-tasking and not fully engaged when compared to an in-person meeting. Human interactions are always better,” noted one panellist.
A second panellist echoed this, adding: “You don’t gain culture from an algo, you get it from speaking to people and hearing what they need.”
Read more: The evolution of the buy- and sell-side relationship
Another panellist noted: “In a tech driven world, transparency and consistency are needed to ensure counterparty relationships are managed correctly. It is important to know who we can count on. Commitment from our counterparties is needed to build long term partnerships.”
However, whether that is done virtually or via in person and with more human connection is something participants are now exploring.
With advancements in technology, the role of humans within counterparty dynamics has shifted. Panellists acknowledged the worth of direct human interactions, particularly in times of market stress.
“We strive for tech innovation, but we still have hundreds of people on our team. People are still relevant,” emphasised one panellist. “When volatility is stable, we use automation. When volatility increases, we need relationships and to talk to people.”
Another panellist echoed this sentiment, noting that the levels of volatility in a given moment dictate which route to take when it comes to choosing between tech versus human interactions.
“Data [and technology] is great, but we still need to talk to people,” they added.
For trust-based relationships to continue to thrive in a tech-driven landscape, candid conversations are needed, the panellists added.
“It is essential for us to know where banks are outperforming or underperforming,” said one panellist, explaining that having social engagements and human relationships can help drive success in this regard.
Another noted that in “crisis mode”, participants often go back to traditional ways of dealing, however they still use technology – adding that the new ways to relate to participants can be fruitful. Despite advancements in technology being useful, panellists agreed that finding the balance is critical.