Tradition, High-Tech Blend in Finance Space

BUILDING DIALOGUE: Moving Forward

The finance sector continues to transform as it adapts to several major forces, including altering regulations, consumers’ increased use of digital banking and demands for increased cybersecurity. Following the 2008 recession, large financial institutions changed where they focus their investment dollars, namely less in personal lending and more in wealth management and investment banking.

Jenny West, LEED AP ID+ C
Business Development Manager, Knoll

Also, consumers’ expectations that transactions can happen anywhere, anytime, means institutions must attract and retain a variety of tech workers and compete with top tech companies for talent. Meanwhile, emerging financial technology, or fintech, companies continue to research and develop digital solutions to nearly every aspect of banking and finance, often partnering with larger firms and companies.

Slow Growing Momentum

Finance firms have recovered profitability, but slowly, since the 2008 recession. Though banking and finance industry employment grew in 2014 at its strongest rate since 2006, up 1.9 percent year over year, it still lagged behind the nationwide average of 2.4 percent in the same time period, according to data from the Bureau of Labor Statistics, and was 3.7 percent below its prerecession peak.

But, there have been some positive signs toward accelerated growth more recently. Between 2010 and 2015, finance industry wages have grown 43.5 percent faster than the average growth in other nonfarm industries, as reported by the Bureau of Labor Statistics. Salaries for compliance officers, in particular, have grown quickly, ahead of compliance officers in other industries.

Fintech Growing Quickly

A fairly new sector of the finance industry, financial technology started showing the documentation of investment dollars and activity in 2015 to make it a mainstream player. Fintech companies produce technology designed to handle a number of financial services transactions, from lending to investment advising.

“I am a believer that the bank of the future will be a collection of apps on your phone,” says Savneet Singh, founder and president of GBI, an online exchange for gold and silver, who has invested in about 10 fintech startups so far, including ones specializing in lending and insurance.

Many global firms supporting fintech lab space hope to tap into mobile, cloud, analytic, cybersecurity and regulatory innovations. The number of fintech companies globally has grown 26 percent year over year. Some industry studies show that moving daily financial transactions to mobile cuts the cost of customer interactions by more than half. According to research from Goldman Sachs, by early 2015, one-tenth of all payments in China were made by Alipay, a third-party online payment platform founded by tech giant Alibaba Group.

Dramatic change is expected, as many technologists suggest that the future of money may include no money. More cashless transactions via devices, facial recognition, wearable technology and bioimplants could come soon so investments in data storage, analytics, cybersecurity and other technology disciplines is expected to grow.

Finally, as more consumers go digital with their finances, customer service call centers have grown in size and importance, as well as the sophistication of the employees responding to requests. Often called remote virtual specialists, these highly trained employees work in call centers, usually located in suburban areas with less-expensive real estate. The goal is to provide consumers support in keeping their everyday transactions where they cost less, online.

Workplace Priorities

1. Make room for larger back-office staff. Overall, hiring in the finance sector has been below national averages, at 1.9 percent compared to nationwide 2.4 percent since February 2015.

Financial institutions are seeing less profit for work done by front office staff, such as research analysts, investment bankers, and traders. They’re putting more money into hiring back office staff that support cybersecurity, legal and compliance work.

Financial institutions are competing directly with technology companies by choosing nontraditional office locations in urban centers where millennials, in particular, like to live and work.

2. Design for a young, tech-savvy workforce. “IT is taking the lead on how are we going to change our design going forward because they hire the most millennials,” says Riccio of Blackstone. He shares the example that traditionally cautious and restrictive IT departments at financial institutions are allowing for more bring-your-own-device options for employees. Riccio says this shift impacts design.

As part of their effort to gather intellectual firepower, many large financial institutions acquire small companies. They must accommodate these new, startup-minded workers or lose them. This mixing of cultures creates unusual design challenges.

The fact that many younger workers came of age during the financial crises complicates recruitment and retention for banks even more. Fortunately, opportunities to make big, intellectual contributions and overcome challenges by digitizing financial transactions have proven an effective recruiting tool for the finance industry.

3. Improve efficiency of in-person transactions. Tellers still serve many customers’ needs, despite increasing use of online banking options. Considering this continued dependence on personal attention, financial institutions are trying to create a great in-person experience as efficiently as possible.

“We’re seeing a hub and spoke model at the branch level. Where perhaps 10 years ago banks and credit unions would have built 7,000- or 8,000-square-foot sites. Now, a bank or credit union may have a flagship strategically placed within in a community where it offers a full range of services, then micro-branches in busy areas like strip centers, with adjacent parking,” says Ritner of Newground.

More customers can reach their bank, ideally, and complete their transactions without needing much space or time with tellers.

4. Minimize real estate costs. The increased cost of real estate in the world’s financial centers has led to the average space per worker in finance shrinking by 25 percent from 178 sf to 129 sf globally over the last 10 years. By developing strict security measures for employees regarding data transfer and information storage, organizations are able to create more collaborative spaces, allow corporate employees to work from home and, thereby, reduce the footprint per employee in their corporate spaces.

To learn more about this topic or other research resources Knoll can provide, visit www.knoll.com/research.