Definition of front-, middle- and back-office terms. What is working in the back office of a bank?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

“All professions are needed, all professions are important” - we all know this from childhood. The fact is that in the modern world everything is interconnected, so many terms of foreign origin have appeared, the meaning of which is unknown to most citizens. Re altors, image makers, copywriters, surveyors - you can’t immediately say what exactly these people do. The same can be said about the back- and front-office specialists. Who are they, where do they work, what is their direct responsibility?

Financial Institution Front Office Definition

This term refers to a group of departments in organizations responsible for working with customers or clients. Front office specialists are at the forefront, this is the face of the company. The success of the entire institution depends on their professionalism, competence, friendliness. In the banking sector, such employees process applications for opening a deposit or obtaining a loan, advise on any issues, distribute banking products, etc. That is, specialists constantly accompany the client from the moment he arrives at the branchbank and before the conclusion of the transaction.

What is a back office?

This is the operational and accounting division that ensures the operation of the departments that manage the assets and liabilities of the company. The back office is a gray cardinal. Clients and customers cannot appreciate the work of its specialists, although they put a lot of effort into the prosperity of the business. Such divisions are in banks, investment companies, organizations that make transactions in the securities markets. They employ from 3 to 15 people, the number of employees depends on the size of the institution.

Work in the back office of the bank involves the preparation of management reports, the execution of settlements on securities and cash on transactions concluded by the front office. Also, its employees are engaged in monitoring compliance with limits, maintaining an internal report, and providing information for accounting. The back office specialist works only with contractors, he does not cooperate with clients.

What does the middle office do?

This unit can be called a link between the front and back offices. Its functions are rather vague. Bank specialists are mainly involved in drafting and signing contracts, providing clients with various types of reports, accepting instructions for withdrawing funds, buying and selling, etc. The middle office is also responsible for coordinating standard forms and regulatory documents with other departments, developing methods conducting new operations. Its specialists in most cases work on the orders of the foremost workers.

What are the responsibilities of back office specialists?

Employees of financial institutions must draw up contracts for the sale of securities, keep a register of transactions. The specialist monitors the re-registration of securities, since the transfer of ownership to the buyer from the seller must be made. The back office performs this procedure based on the transfer order contained in the register of the securities holder.

The new owner must receive all the necessary documents, and the specialist, in turn, controls the settlement process between the companies of the seller and the buyer. A back office employee has a huge responsibility, because the slightest mistake, which at first glance seems like a minor inaccuracy, can lead to large-scale problems. In the worst case, the company suffers significant losses due to the recognition of the transaction as invalid.

Comparison of front and back offices

These two divisions are opposite to each other. The front office is the work with clients, the face of the company. Specialists are always in sight, the future of the organization depends on their professionalism and resourcefulness. The back office is working in the shadows. Not everyone knows the employees of the unit by sight, but they, like worker bees, shovel many important cases. All specialists work for the good of the company, but it is still important to draw a line between different departments so as not to shift the responsibilities of some onto the shoulders of others.

Front-office and back-office have different functionality. The first is working on improving the speed of servicecustomers, maintaining the reliability of the information received, prompt registration of sales. The second is focused on sales analysis, preparation of a card index of goods with prices, a pricing system, control of the movement of products in warehouses.

Separation of divisions can occur both at the software and hardware levels. There is no clear boundary between them, it is just a system of concepts. The separation of back and front offices is necessary on a psychological level. The head of the company must understand that more professional and experienced specialists are required to work in the first subsystem than in the second, since they have greater responsibility and more difficult work.