Not much needs to be said about the impact of rising rates and volatility on the muni market — new issuance and trading activity have been impacted, and a look into the crystal ball suggests the rest of 2022 will be more of the same.
Add to that the challenges of attracting and retaining talent — be it the work location dilemma, work-life balance, or the fact that salaries and bonuses have and continue to rise. All of this leads to the question of how do we continue to drive growth, innovation, client service and engagement with these headwinds?
Let’s start with the fact that nothing lasts forever. While it feels different this time, markets are cyclical. As a respected muni market professional recently told a group of peers, “the reasons for any cycle are unique but, the fact of the matter is that markets are cyclical, and this too shall pass.”
She then turned to me and said, “this is where we need to be smart enough to leverage technology and cost-effective resources Lumesis and other providers bring to the market. Outsource and become efficient where you can. Let your people focus on what matters most — being innovative during volatile times to help issuers meet their needs. Anyone who says technology is too expensive is not being honest with themselves.” This prophetic senior public finance professional had an impact on her audience.
A day later, during a session at The Bond Buyer Texas Public Finance Conference, a panel of Heads of Public Finance was discussing issues they faced around attracting new hires. Compensation is up and work-life balance, diversity and inclusion and culture are more important than ever. Moreover, tasks that can be “outsourced” to a third party or technology — especially where the same are manual or menial — need to evolve to be able to keep and develop talent. While a slight twist on the words of the prior day, it certainly rang familiar.
As hiring and business managers contemplate our evolutionary workplace, the exploration and exploitation of technology solutions is key to managing costs (especially as profitability is being challenged) as is attracting and retaining talent.
At The Bond Buyer Texas Public Finance Conference, one of the speakers elaborated on the points above, highlighting the importance of being aware of tools available in the marketplace and leveraging the same to change processes we have done the same way for too long. Telling an analyst to pull data by hand to identify comparable issues and bonds and write a scale by hand because “that’s the only way to learn” is no longer acceptable or true. Spending hours doing SEC Rule 15c2-12 reasonable diligence when resources are available at a fraction of the cost makes little sense (do you want your analysts to be experts at doing a 15c2-12 analysis or to be aware of the rule, review results and focus on more value-added work?).
While learning comes from doing, the “doing” need not mimic the ways of yesterday. Efficient and comprehensive data and information gathering can make the learning process richer and allow resources to focus on truly value-added aspects of the deal process.
Make no mistake, technology, especially in the municipal market, continues to be a work in progress. At this same conference, I had the privilege of joining other fintech representatives on a panel. We spoke about how our respective firms, and others, are working to transform the municipal market.
While we discussed the importance of the technology, we also recognized the limitations of technology in the muni space — from documents filed with the MSRB that cannot be machine-read to the lack of trade data for certain bonds and in certain circumstances — and how these limiting factors have and will continue to promote innovation to solve our market’s inefficiencies.
All of us, from the newbie to the most senior person on the team, leverage technology in every aspect of our lives to make us more efficient and to provide us access to the most meaningful and up-to-date data.
Think of what you can and do learn efficiently today and how different it is from yesteryear. Municipal market participants must continue to adapt and move our market forward. The cost of not doing so will negatively impact the evolution of the muni space and leave the naysayers behind in terms of attracting and retaining talent and maintaining and growing clients.
Technology enables us to be better, smarter, and faster and allows its adopters to focus on more substantive tasks, unearth insightful information and manage human relationships.