The rise in remote work has had an inverse effect on securities fraud—with new research suggesting remote bankers are five times less likely to engage in misconduct working at home.
- A peer-reviewed study from the European Financial Management journal argues that bankers who work from home are setting higher ethical standards than their office-bound colleagues.
- An analysis of five UK banks and 162 traders found that remote traders had a 7.3% chance of sparking misconduct alerts, compared to 37.6% of employees in the office.
- “Our difference-in-differences analysis reveals that working from home lowers the likelihood of securities misconduct; ultimately, those working from home exhibit fewer misconduct alerts. The economic significance of these changes is large,” says the study.
Why It’s Important
Securities fraud is a major issue for financial institutions, with proven instances resulting in jail time for guilty parties and reputational damage to large organizations that cost millions in the long term. Large financial institutions are always looking for fraud, but not all of it is caught.
The new study goes against the stated wisdom of large financial institutions, which have spent the past year attempting to crack down on remote work. JP Morgan and Goldman Sachs have made very public pronouncements about the dangers of remote work and publicly called for their workers to return to the office for five days per week. As Fortune notes, this could unintentionally be facilitating fraud.
Part of the problem appears to be that offices have ways of unintentionally creating opportunities for fraud. In an office, information flows freely, and collegial misconduct encourages other employees to engage in the same indiscretions and seize opportunities as sensitive information is exchanged throughout the workweek.
“The analogy is akin to moving a box of doughnuts away from a group of dieting colleagues–when temptation is out of sight, it’s also out of mind,” argues Fortune’s Gleb Tsipursky, Ph.D.
Home offices are frequently shown to be better for company morale, with workers feeling less stressed, more connected to families, and more personally fulfilled and productive. With workplace demand pushing more heavily for hybrid models—allowing employees to remote work several days per week—financial institutions could see a decrease in securities fraud going forward if they embrace the model.