Banking and finance outlook

Driving Innovation and Resilience in Banking: The Critical Role of Real Estate Strategy

April 27, 2023
  • Sarah Bouzarouata

It is imperative that banks and financial institutions be agile and efficient in the face of an increasingly competitive and changing landscape. The banking sector faces unique pressures in the current operating environment, grappling with unprecedented levels of economic uncertainty and a confluence of headwinds including the pandemic’s impact on hybrid work preferences, cost pressures in a rising rates environment, evolving customer expectations, geopolitical shifts, and increasing regulatory requirements. The structural and cyclical factors shaping the industry reinforce the criticality of innovation and digital transformation in sustainable banking. Moreover, recent events in the banking sector have emphasized the importance of developing agile infrastructure to sustain resiliency.

The challenging landscape has driven organizations to accelerate their digitalization efforts as a source of resiliency and innovation. These efforts will lead to a fundamental restructuring of business models across the banking and financial services sector, and will have a significant impact on business priorities, the workforce, the workplace, and in turn, corporate real estate portfolios. By aligning real estate strategy with broader corporate goals, banks can ensure that their real estate is optimized to support their tech transformation, DEI and sustainability objectives, and other strategic priorities. In this report we outline how banks can build on progress to date to maximize efficiency and stay the course for long-term business growth.

To keep up with the rapid pace of AI advancements and leverage innovation to maximize operational efficiency, real estate can be a strategic enabler that supports broader transformation. To achieve this, financial services organizations should focus on the following:

  1. Conduct a comprehensive review of your real estate portfolio to identify areas for optimization and align strategy with new hiring and business restructuring efforts. As part of this, prioritize sustainability in the leasing process to reduce operating expenses and meet decarbonization targets.

  2. Accelerate digital innovation to improve operational efficiency and unlock new sources of value, and stay ahead of regulatory changes, evolving customer needs and growing competition. This can be achieved by implementing a strong real estate strategy that provides the necessary infrastructure to support advanced technologies.
  1. Consider the impact of talent and location on real estate strategy to support DEI and tech transformation goals and stay competitive in the evolving financial industry. By strategically diversifying portfolios in markets with niche talent pools and markets with scalable talent, banks can build a resilient workforce and position themselves for success in a rapidly changing landscape.

  2. Drive successful portfolio optimization and create a magnetic workplace that maximizes space efficiency by building a tech-enabled workplace that fosters innovation, productivity, and engagement. This requires aligning performance measurements with strategic goals and leveraging real-time and predictive insights to enable quick decision-making and adaptability. By doing so, organizations can unlock the full potential of their workforce, improve space efficiency, and drive long-term growth.

Download JLL’s latest Banking and Finance Report for more research and insights on how financial services organizations can leverage their commercial real estate portfolio to advance their transformation goals.

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