Bank back office functionality. Back office and capital market. Back office in the bank

What is Back Office

Back office Is a term that refers to that part of business operations that are aimed at solving problems necessary for the normal functioning of a company. This definition comes from the tradition of placing technical and other non-public relations departments at the back of the business facility.

What is a back office, in simple terms.

In simple words, the back office is the company's employees who do not interact with the public. They support all the technical activities of the company, which are usually hidden from view. Examples include departments such as accounting, IT department, warehouse workers, and so on.

The main components of the business.

Traditionally, almost any business consists of several areas that form a holistic and working structure of the company. Each of the areas in a strict order performs its own tasks to ensure the work of other departments.

Company architecture:

• Front office;
• Middle office;
• Back office.

Now let's look at each sector in more detail.

Front office Is the area of \u200b\u200bthe company that is responsible for the direct interaction of customers with sellers. This can include: salespeople, sales managers, consultants, investment brokers, traders, and so on. In general, this category includes those employees who directly generate income for the company, so to speak, make real money. In addition to specific specialties, a front office is usually called a showcase of a commercial site, in particular an online store.

Middle office Is the field of activity in which the administrative and management personnel work. This includes analytical departments, financial management departments, marketing departments, and so on.

Back office Is an area that does not directly generate revenue for the business, but provides vital support and administration. These include: HR, accounting, logistics, technical personnel, postal and warehouse departments, IT - department. By analogy with the front office, the internal administrative part of the site, to which ordinary users do not have access, is usually called the back office. Sometimes there are variations in the use of the term back office as a definition personal account in a particular Internet project.

What is the difference between a front office and a back office?

After reading the above short definitions of these areas of employment, we can conclude that the main difference lies in public interaction with customers. It should be noted that there is no significant difference in salaries between these niches. IN this issue a specific profession and responsibilities assigned to a person play an essential role.

What back office and front office? What are their functions and differences?

Front office (English front office) is structural subdivision a company whose competence includes, first of all, working with clients and for clients, rather than performing secondary ones, such as service support, risk management, acceptance of complaints, and other ordinary operational processes.

The name of this division of the company is associated with the fact that the front office staff is always in front, in the sight of clients, while the service staff is "invisible" to consumers, and they may not even know about its existence.

In companies of various profiles, the front office includes different types activities. For example, in financial corporations the front office is responsible for such areas as sales (sales), trading (trading), mergers and acquisitions (M&A).

Front office managers are those who directly contribute to the company's profit. Some question the equity research function because such analysts do not directly do the work that makes money, such as the sales force, for example. However, this is not the case, as those involved in the analysis of assets have to see clients face to face more often than everyone else. Meanwhile, traders almost never see their clients live, but nevertheless they work in the front office.

Traditionally, positions in the front office are more prestigious and highly paid than in the back office. In investment banks and other financial institutions, getting to work in the front office is the hardest part. There are very high requirements for both formal education and personal qualities.

Back office (English back office) - these are departments, departments of the corporation that perform routine, administrative, serving the functions of managing the business as such. The back office functions also include IT (database administration, support service), accounting, HR. Statistical and analytical accounting of sales, purchases, warehouse balances, archiving - all this can also be within the competence of the back office. In banking institutions, the tasks of the back office include clearing operations, current settlement and cash services, etc.

The term back office comes from the times when the layout of company premises was such that the front office was visible in the foreground (so that clients could easily and quickly enter the company and find the right employeewhich they dealt with), while the backyard housed production, administrative offices, product development and testing departments, warehouses, etc. Needless to say, the management of the companies has always strived to make the front office make the best impression. To do this, they made expensive repairs there, invested money in interior design.

The back office area was often dingy, gloomy and not very well maintained. They did not pay much attention to her presentability. clients did not show up there anyway. However, back office staff in most cases make the greatest contribution to the development of the company. Today the back office is not necessarily geographically located near the headquarters. On the contrary, they are trying to transfer it to where the costs are lower (for example, to the countries of Southeast Asia). Also today, it is not uncommon for the functions performed by the back office to be outsourced.

The importance and significance of the back office is often underestimated. However, its role is valuable to business success for at least three reasons:

1. Maintaining the company's reputation. In a highly competitive environment, a company's reputation is extremely important. Back office employees, by doing their job, also support the name of their company. For example, call-center, service support specialists, service personnel, while communicating with customers, leave a favorable impression, strive to fully satisfy their wishes.
2. Management of risks. As a rule, top managers lazily read ready-made financial or other reports, not really thinking about what kind of work and effort it cost ordinary workers. Insofar as management decisions are accepted on the basis of data, facts, calculations, figures, then their accuracy and correctness is extremely important. Accordingly, those who enter the initial data and make calculations perform very responsible work and reduce the risk for the top echelon of making an ineffective decision.
3. Reward. Although back office workers do not directly generate money for the company as they do in the front office, they can nevertheless negate the efforts of their colleagues with ineffective activities and solutions. In addition, new cost saving methods or rationalization proposals proposed by the back office can directly or indirectly increase the company's profits.

If we move away from the management terminology and speak a little cynically, then the front office is tough guys in expensive suits, slightly arrogant and too self-confident. The front office has a more presentable and representative appearance than the back office. The front office employees are confident that they are the most important, and the back office is a periphery, a gray area, a place for dull, mediocre personalities. Salaries and bonuses differ accordingly.

Today, the terms back office and front office are most commonly used in the context of investment banking, where this division is most clearly expressed.

Any investment bank has three offices: Front Office, Middle Office, and Back Office. In this article, we will tell you what it does and how each department works.

Front Office interacts directly with customers. The main task of Front office employees is to conclude transactions with institutional and private clients, which will bring profit to the bank and increase the assets of the clients themselves.

Front Office employees work for primary and secondary financial markets.

Primary market investment bank includes a department corporate finance (IBD - Investment Banking Department), in which bankers provide advice and services for raising funds and restructuring clients' businesses. They deal with mergers and acquisitions (M&A), capital raising (Equity Capital Markets) and client debt restructuring (Debt Capital Markets).

The Secondary market consists of Trading, Sales and Research departments. Front Office is characterized by strict separation of corporate finance and trading departments in order to limit the exchange of information between departments and to avoid conflicts of interests between the client and the bank through the use of inside information.

Front Office Feature:

· Work is associated with stress and constant stress - huge amounts of money depend on the decisions of employees, which they have to make in a short period of time.

· A lot of! A lot of work! Front Office employees are real careerists and workaholics. Working 80-100 hours a week is the norm for them.

· Work in the Front Office of an investment bank is one of the most prestigious and highly paid in an investment bank.

Middle Office deals with technical and administrative support. Inside it is divided into sections.

In the risk management department, analysts and risk managers work closely with the front office teams to provide them with updated information on various financial products and financial markets. This information helps employees to minimize investment risks.

The financial statements are prepared by the product control department.

The Middle Office also includes a legal department (compliance), which monitors legal support of transactions and the requirements of the regulator - the Central Bank. They also manage legal risk by ensuring that the bank's practices comply with laws and industry standards.

Liquidity, operational and reputational risks are managed by the treasury department.

Middle Office Feature:

· Great responsibility! If in the front office employees are more responsible for financial performance, then in the middle office they are responsible for the bank's compliance with all legal rules and requirements. The reputation of the bank largely depends on the quality of their work.

· Negotiating with the front office. Middle Office employees often have to warn the front office about high risks and convince them to abandon unreasonably risky deals.

Back Office- this is the department of transaction support, management and quality control.

The Operation & Settlement department is responsible for checking transactions for errors and customer payments.

Administrative functions include work with personnel (HR), marketing, brand formation and promotion, adherence to quality standards for the provision of services in all bank offices.

Also an important part of the back office is the IT department, which deals with issues of technical support, improvement and automation of processes, fixing technical problems.

Back Office Feature:

· Normalized working hours as opposed to the front office.

· Interaction with other offices of the bank. International banks often bring together teams around the world to quickly address the challenges posed.

· Employees face constant work deadlines. Yet the work is not as stressful and intense as in the front office.

We will tell you more about the work of each Front office department in one of the following materials.

/ Your tPeople team /

A new English-language word "back office" has appeared in Russian everyday life. What it is? What functions does it perform? In which companies does it exist? Let's try to figure it out in more detail.

Back office. What it is?

These units exist in many organizations. A back office is a department or department of a company that has specific functions. We are talking about routine, administrative and service. Traditionally, the functions also include information Technology (administration and support), human resources and accounting.

Some organizations have separately registered additional directions work to be done by the back office. What is it? Often, employees of this department are engaged in statistical and analytical accounting of sales, purchases, warehouse balances and archiving.

If this back office is a bank subdivision, then the functions include the execution of clearing operations, current settlement and cash services, and so on.

Back office history

At the initial stages of business development, the layout of the premises of any company was special. The foreground was occupied by the so-called front office. This was done so that clients could quickly and easily find the right employee. Naturally, management invested heavily in this space, making expensive repairs, cleaning and furnishings. The front office had to make the best possible impression, as this is the "face" of any company.

Its employees must also match the style of dress and behavior. This is the public side of any company.

The back office was traditionally located in the background. This is the place where the production itself was carried out, there was a system of administrative premises, various departments, warehouses, and so on.

Therefore, these territories have traditionally been dirty, gloomy and not very well-groomed. The presentability of these premises was not very well monitored, since clients never appeared in them. Naturally, to appearance there are no special requirements for employees. Much attention was paid to professional skills and abilities.

This division of the office into two large divisions that perform different functions has worked well and exists to this day.

Front office staff create a beautiful "picture" for the company. At the same time, it is thanks to the back-office staff that the development and prosperity of the company takes place. Why? Let's consider.

Significance and importance of the back office for the development of the company

Practice shows how great is the role of this unit for the organization.

First, the back office helps maintain a company's reputation in a highly competitive environment. Naturally, if employees perform their duties well and clearly. Indeed, for any client, the main criterion of a good company is a quality service. Thanks to the back-office employees, a full cycle of a particular operation is performed.

Second, the back office also handles risk management. What does this bring to the company? It is the employees of this department who draw up reports, select data, factors and make calculations, on the basis of which management decisions are made. Therefore, their correctness and accuracy are very important for the future of the company. Employees, on the other hand, perform extremely demanding work, significantly reducing risks.

Third, the back office is also developing new cost savings and rationalization proposals. Naturally, employees do not directly earn financial resources for the company. But they can indirectly influence this process.

Back office in the bank

It is an operational and accounting unit. Thanks to his work, the activities of the main departments are ensured.

The back office deals with accounting and registration of transactions with securities, management of liabilities and assets, as well as settlements with clients. But this is just the tip of the iceberg.

The back office carries out loan processing operations. In addition, employees are often involved in opening accounts, implementing accounting transactions and risk management.

Back office. Documentary registration and support of transactions on the securities market

In banks, the back office often consists of several divisions. Especially if the organization makes a large number of transactions in the market valuable papers... The duties of employees include electronic and documentary registration, their support. Let's dwell on this in more detail.

Firstly, a back-office employee maintains a transaction log, draws up a sale and purchase agreement for securities of a certain issuer.

Further, the process of re-registration of securities takes place. It is about the transfer of property rights. To "start" this process, the back office employee must issue a transfer order and legalize the current transaction.

After the re-registration is carried out and the supporting document is received, the employee controls the final settlement process.

A very big responsibility is imposed on the back office employee. If there is the slightest inaccuracy in the process of paperwork, the transaction is declared invalid. As a result, the client will suffer and the company will suffer serious losses.

In addition, the back office is engaged in analytical (internal) transactions between divisions in the organization in the financial redistribution system.

For trade in last years often use a variety of back-office automation programs.

Retail Back Office

When organizing a business, a leader faces many challenges. It is necessary to provide shopping room goods, automate warehouse accounting at the enterprise, manage pricing, interact with suppliers and branches.

In order to solve these and many other tasks, as noted, there are special programs for the back office.

In system retail employees of such a department will help control the arrival and departure of goods, write off and move, revalue, make returns, cash and banking operations, work with retail equipment.

The software package can have different configurations: non-food retail, convenience store, mini-market or supermarket. There is currently a choice.

Back office in network trade

The main areas of work in network trading are:

• making changes and additions to a large range of goods;
• data exchange between departments;
• maintaining centralized accounting;
• receiving operational reports on the functioning of branches, etc.

To facilitate work and ensure the interaction of the office with the network retail outlets, often use the automated back-office option. These programs allow the organization to work more efficiently and quickly.

Back office in catering establishments

At work for employees of the back-office of the enterprise catering mostly current operations. They traditionally include the following:

• performing routine obligatory operations;
• maintenance of commodity and warehouse accounting;
• the process of control over the production of dishes;
• collection and analysis of data;
• making report.

Depending on the volume and turnover of the organization, the back office in trade usually numbers from three to thirteen to fifteen people.

Currently, as noted, there are automated systems to facilitate the operations to be performed by employees. This is, naturally, a positive moment for the head of the organization. But not always for workers. Practice shows that the acquisition automated systemsdoing most of the back-office work leads to downsizing.

The concept of a back-office system is firmly entrenched in the retail industry. This is the tool that allows you to consolidate and align all business processes. In the battle for shoppers' wallets, the checkout - the front-office - is the front line. The back office, which provides the command, is the back office - the company's trading system, covering all processes in the store - from ensuring sales to analytical reporting. Whether the store owner turns out to be the winner in this battle depends on how it will correspond to the tasks facing a particular enterprise, and how efficiently it will work.

There are different systems

I must say that today the term back office itself is somewhat vague. In the West, this is meant as a management component softwareand accounting. In Russia, due to the specifics of “national accounting”, software suppliers for stores tried to move away from it, and the back office is often understood only as the part that is responsible for managing business processes. In addition, there is a separation of back-office and head-office, the first is the trading program installed in the outlet, the second is the head office system of the chain of stores, which manages the trading programs of individual objects. Meanwhile, many systems assume that the head-office is also a back-office, that is, the trading program installed in the head office of the network directly controls the processes taking place in the stores. And once this term meant just a program for accounting for goods. However, those days are long gone.

As Mikhail Orlov, product manager of the back-office software direction of ATOL Group, noted, a modern back-office can no longer be called just a commodity accounting system:

Nowadays, the back office is a full-fledged one, responsible for all the main business processes at a trade enterprise. A back office system should include inventory control, supplier relationship management, pricing, product preparation for sale, discount, interaction with, implementation of network exchange, production, personnel management and much more. At the same time, despite the completeness of the functional part, the back office should be easy to understand and manage, have a high speed of deployment on shopping facility and have the stability and efficiency of processing various information. An important criterion for a good back-office solution is the support of a large list of commercial equipment.

Despite the variety of tasks, back-office functions are reduced to a few critical points. Here is the opinion of Anton Murzin, director of the consulting agency GKTs:

First of all, the back office should divide the business processes of the enterprise into several separate processes, each of which is performed by different employees with different access rights to information. This reduces the requirements for the qualifications of employees and solves the problem of ensuring the security of working with information. The main advantage of this approach is the ability to make the system as flexible as possible. For example, the most important function of a back-office program is retail price management. This is not as easy a task as it might seem. The price of a product sold separately may differ from the price of a product sold in small wholesale packaging. The price of a product may also depend on what other products are purchased with it. Finally, the price may change when purchasing a product with a discount card and during various marketing campaigns. The trading system must take into account all these points. And not just take into account, but allow the price change to optimize profit. And this is also one of the goals of separating processes. Sometimes the price is included in the item's record card with its description and code, while the trading program loses its flexibility when working with the cost of the item. Product pricing is a separate business process, and to provide all of the above capabilities, it must be separated from the inventory process. It is also important to separate the definition of management policy from the procedures for its direct implementation. Determining the procurement policy is a responsible business, which in trade organization is engaged in leadership with the participation of qualified specialists. Less qualified managers can also execute it, that is, apply the established rules. Likewise, the policy of discounts should be set in the center and executed automatically directly at the checkout.

The second most important task of the back office program is to reflect what is happening in the store with inventory. On commodity stocks Several processes affect: these are the supply of goods, sales, return of low-quality and unsold goods. An accurate reflection of the situation in the store is created due to the consolidation in the trading program of information about goods obtained from several sources: from cash registers, data collection terminals in the warehouse, etc. In addition, the system must consider the movement of goods within the enterprise, for example, own production... Further, there are also disregarded “operations” such as theft. That is, the system must take into account the realities and allow the data to be corrected during the inventory.

It is necessary not only to determine which goods were sold during the period - all commodity accounting programs are able to do this, - says Anton Murzin. - An important characteristic of an automation system is the ability to conduct renal analytics - and in this indicator, various systems differ significantly. Are you talking about a one-time large purchase or a constant demand for this product? Was demand growing or falling during the day? The size of the order depends on the answer to these questions. Whether your system provides kidney analytics capabilities, and if so, how fully is it used - the answer to this question is important for the correct organization of trade flow.

All of these functions are standard for back-office systems, however, each system has its own peculiarities in their implementation, which determine its compliance with the tasks facing a particular store or network.

Undoubtedly, with sufficiently formalized general operations, each retail format has its own requirements for the back office, says Mikhail Orlov. - For example, for the cash - & - carry format, the dependence of the price category on the quantity of purchased goods is very important, for clothing boutiques it is very important to be able to keep inventory with the so-called characteristics of goods (sizes, colors). In addition, for example, a discount policy is very important for these formats. A good back office system should take into account all of these requirements.

Chain stores also have special requirements for the system. In particular, such requirements include: the ability to operate the system in real time with remote objects (or the ability to carry out fairly frequent synchronization), the ability to operate offline stores in the absence of communication with the central office, and increased requirements for ensuring the security of data exchange. For example, such a solution is used for this as a single back office of the chain stores, which stores a database of all outlets. This allows you to exclude one link in the trading program, simplifies and speeds up the work. The volume of transmitted information is reduced, because the data comes only from cash registers, and the database on the store's server works autonomously. Security is increased, almost all possibilities to change anything in the central database disappear. But, of course, this approach also has its drawbacks, which include somewhat less flexibility.

Market trends

Today, the main direction of development in the market of back-office systems is the expansion of functions trading program to ensure full automation of a wide variety of trade enterprises For example, there is now a trend towards multi-format retail chains, and software vendors have responded to this need. In particular, this possibility is achieved by using the modular structure of the complex. Moreover, each module implements its highly specialized function, and the customer himself chooses a set of necessary modules. If it is necessary to expand the capabilities of the trading system, additional modules are simply purchased. Another area of \u200b\u200bdevelopment is the need to take into account the emergence of new technologies. In particular, bar-coding is widely used today, but RFID technology is on the way - radio tags.

The main trends in the retail market can be divided into two components, - explains Mikhail Orlov. The first is the understanding that automation is needed by everyone, even the smallest retail outlets, the second is the higher requirements for the back office functionality of large retail chains. Speaking about the first trend, it is worth noting that the owner of a small store has much more operational work and the cost of an error is very high, and sometimes critical for the entire business. If for the owner of a large trading enterprise the main task is strategic management and competent delegation of powers, then the owner of a small store has to do most of the work independently. Therefore, an understanding comes that a high-quality management system will be a faithful servant and helper. It is thanks to this trend that almost every back office developer has solutions for small retail. As for the second trend, for the leader big business there are already few standard back office functions. There is a need to solve many problems in real time. Therefore, there is a great need for optimizing network communication technologies and for improved data analysis. Considering these requirements, the developers offer new technologies that strive to make the process of solving many problems as efficient as possible, for example, NetHive Aitida technologies, URBD from 1C and others. With regard to our developments, a separate word must be said about the technology of Aitida NetHive. This technology can significantly speed up the process of data exchange in chain stores and significantly save on investment in automation for any retail network enterprise. Many chain stores are interested in implementing this technology.

In conclusion, there are a few more points that are important when choosing a back office system.

You need to understand the main thing: no high-tech automation will help if there is no clear organizational structure and systems approach to the implementation of business processes - advises Mikhail Orlov. - And when choosing back office system, try to install it and do standard operations (receipt, revaluation, unloading at the checkout). Already at this stage it may become clear how the system suits you.

According to Anton Murzin, the system should be modern and ensure the functioning of the business for the next 7-10 years: this is its minimum service life. Therefore, you should not put your business at risk by choosing a solution, life cycle which is coming to an end. Easily scalable and scalable - these qualities are also required for a business-oriented system.

The crisis, which has led to the complication of obtaining loans, can become an engine for the development of information solutions in trade. The current situation forces companies to think about the efficiency of use working capital... Solve the issue of increasing efficiency without having a comprehensive information system, impossible.

"Commercial equipment in the Urals" No. 3/2009