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News release

CHICAGO, IL

Banking Industry “Change or Die” Mandate Comes to Branches and Offices

Corporate real estate strategies are helping financial institutions improve efficiency ratios, profitability, compliance and more


CHICAGO, Feb. 5, 2014 — Financial institutions are at a crossroads; change or die is the message that shareholders are sending as they lose patience with slow growth and tepid stock market performance. Most institutions have exhausted large-scale cost reduction programs, and are now turning to new revenue streams and other sources of value. In 2014, corporate real estate could be the next opportunity to improve efficiency ratios and profitability in several key ways, according to a new Jones Lang LaSalle (JLL) white paper:

  • Boosting the Efficiency Ratio. For larger institutions, the significant cost of Dodd-Frank compliance has exacerbated margin compression and the quest for cost savings in all operational areas. Many financial institutions are right-sizing their front- and back-office facilities to reduce costs even as they invest in making their retail delivery channels more tech-savvy and adopt space-saving workplace strategies that inspire collaboration and innovation.

Yet, the most efficient institutions have learned to view corporate real estate function not just as an expense, but also as a lever for growth and productivity. The real estate function is demonstrating its ability to boost revenues and differentiate its parent institution by expediting branch roll-outs; increasing uptime in critical transaction processing facilities; adopting smart facility transaction strategies; and rationalizing post-merger facility portfolios.

“Banks that move too slowly to use real estate to rise to the challenge of today’s transformed banking industry may experience the costs of inaction,” said Stuart Hicks, President, Banking Industry Group, Jones Lang LaSalle. “These consequences could include M&A underperformance, or lackluster employee and branch network performance.”

Outsourcing is a key strategy being used to lower costs and add value through corporate real estate. Results show that, through strategic real estate outsourcing, a bank can reduce real estate-related operating expenses by 10 to 20 percent—a measurable impact on efficiency ratios. And that’s before revenue impacts are added into the ratios, as well.

  • 2014 Mashup: Bricks + Clicks = Omni-channel Banking Integration. As customers increase expectations for integrated service across ATM, mobile, online and in-person channels, branch facilities are evolving with technology capabilities. Such an omni-channel strategy may include technology-enabled self-service branches with sophisticated ATMs and videoconferencing with a remote call center, or even branches that are like high-tech Internet cafés.

Bridging the gap between marketing, technology and service delivery, corporate real estate departments can efficiently support new retail strategies and delivery channel launches. This agility provides a competitive advantage for banks expanding both at home and abroad.

“As banks fundamentally alter the size and structure of their networks, the corporate real estate function can quickly add top-line value in expediting the rollout of new retail delivery sites—and dispositions of excess facilities,” said Joe Brady, Managing Director and leader of Jones Lang LaSalle’s Corporate Retail Solutions group.

  • “Smart” Buildings, Smart Banks. Smart banks are going green, and going smart—with automated, “smart” building technology. Investments in automated, intelligent building equipment and management systems, such as JLL’s IntelliCommand system, rapidly pay for themselves through reduced energy costs, increased facility reliability and improved data protection.
  • Improving Regulatory Compliance. Regulatory scrutiny is encroaching upon many areas of bank operations, including vendor relationships far beyond the core activities of a financial institution. Banks with wide-ranging footprints are challenged to monitor hundreds of vendor relationships related to facilities operations, a daunting task for banks engaging in mergers and acquisitions.

A second major challenge is compliance with the Americans with Disabilities Act (ADA). Compliance requirements are driving further outsourcing adoption and centralization as banks look to their corporate real estate outsourced partners to help manage compliance. The major real estate service providers are equipped to manage comprehensive documentation of facilities-related compliance activities, streamlining reporting for their client organizations.

Jones Lang LaSalle helps banks and financial services companies derive the most value from their real estate portfolio. This industry is dynamic, complex and fast-paced; Jones Lang LaSalle aligns its collective knowledge to help clients use their real estate as a competitive advantage. The world’s largest financial institutions trust in Jones Lang LaSalle to help them improve the cost, efficiency and performance of their real estate.

A leader in the real estate outsourcing field, JLL’s Corporate Solutions business helps corporations improve productivity in the cost, efficiency and performance of their national, regional or global real estate portfolios by creating outsourcing partnerships to manage and execute a range of corporate real estate services. This service delivery capability helps corporations improve business performance, particularly as companies turn to the outsourcing of their real estate activity as a way to manage expenses and enhance profitability.

For more news, videos and research resources on Jones Lang LaSalle, please visit the firm’s global media center Web page http://bit.ly/18P2tkv.

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $4.0 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 3.0 billion square feet. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management. For further information, visit www.jll.com.