Why optimised office space unlocks more workplace value for banks

Mike Davis, Managing Director of Occupier Services for Asia-Pacific at Colliers, sheds light on the real estate strategies employed by banking and finance firms to enhance business performance.

In the ever-evolving landscape of banking and finance, aligning real estate strategies with digital transformation, environmental, social, and governance (ESG) priorities, and dynamic workforce needs has become paramount. Asian Banking & Finance sat down with Mike Davis, Managing Director of Occupier Services for Asia-Pacific at Colliers, to gain insights into the real estate strategies that can drive better business performance in this context.

Davis emphasized the importance of establishing close and trust-based relationships between the corporate real estate team and the business units they support. Real estate teams must gain in-depth knowledge about a bank's long-term plans for both front office and support functions, which can comprise up to 50% of the workforce, he noted.

For example, whilst investment banking and trading can increase profits with a relatively constant headcount, wealth management's revenues are closely tied to the number of private bankers and their support staff. Therefore, projected revenue growth directly translates to increased office space needs, according to Davis.

Inter-company collaboration is also necessary in order to achieve business objectives. Real estate departments within banks must work harmoniously with IT, risk, finance, HR, and other units to harness the physical office's potential for innovation and technology adoption, ensuring a positive customer experience and employee satisfaction, Davis said.

Core pillars

Davis also delved into how real estate strategies correlate with the core pillars of digital transformation, ESG, and workforce goals

Digital Transformation: The shift to cloud computing impacts data centers and leased offices. Banks should proactively manage third-party data center leases and anticipate the evolving needs of a technology-centric workforce.

ESG Priorities: Banks must prioritize sustainability with measurable targets. Real estate departments need long-term plans for carbon neutrality, particularly for freehold buildings. Additionally, there's a heightened focus on governance (the "G" in ESG) in light of recent bank failures in the US and Europe.

Workforce Goals: Creating environments that support employee needs, including commute, amenities, wellness, and open spaces, is essential. It's about making offices attractive places to work.

A question of space

Banks and financial institutions looking to ensure flexible real estate strategies should consider how employees work, and gauge just how much office space is needed-- taking into account remote work.

Future space requirements, Davis noted, should be based on how many employees are needed to work in the office rather tha n the total headcount, for example.

Future strategies should accommodate shorter lease terms and flexible workspace options.

“It’s about creating environments that people want to work out of,” Davis said, adding that adapting to these changes is essential for banks to remain competitive and future-proof their operations in the ever-evolving financial landscape.