By: Scott Pick, Executive Vice President, JLL
The financial services industry is still in recovery mode. But, despite struggle, JLL’s newly released 2015 Banking and Finance Outlook found “the year-end financials revealed a healthier landscape overall.” Wages in the financial industry have grown faster than average – at 43.5 percent – since 2010, and corporate profits are reaching near record heights.
Maintaining momentum and growth will be critical in 2015.
Luckily, lower oil prices and rising interest rates will play in favor of the financial industry this year. JLL also pointed out three emerging trends that will make a lasting impact. Read on for details, or download the full report.
3 Banking Industry Trends
1. FinTech is innovating the industry. Financial technology, or FinTech, is a label for financial service firms that use technology to enhance products and services.
FinTech transforms traditional banking as we know it. While it’s caused some to cut back on space needs, it’s also opening the door for new opportunities. According to JLL, “…global banks are supporting FinTech lab space with the hopes of tapping into mobile, cloud, analytic, cyber security and regulatory innovations.”
What’s more, the FinTech landscape is exploding. The number of FinTech companies continues to grow—up 26 percent year-over-year. Watch JLL’s video below for what more to expect from FinTech in 2015.
2. Banks are making moves. Relocation significantly outpaced renewal in 2014. According to the new outlook, roughly half of all transactions last year were new leases (46 percent). It’s not surprising, as moving into new space offers fresh opportunities to lower costs, boost productivity, and utilize the office in new and efficient ways.
In good news for those looking to move or shrink: the construction pipeline surged last year, making way for new, high-class opportunities nationwide.
Aside from relocating, banks are also consolidating. The average lease size for the industry two years ago was 52,356 square feet. On average, firms have consolidated by 7,588 square feet since that time (down to 44,768 square feet).
3. Customer experience is key. The consumer can—and more importantly, is— managing virtually every banking need from his or her smart phone. Yet despite the mobile nature of banking, people still visit their banks on a regular basis. In fact, nearly 79 percent of respondents surveyed by the FDIC said they visited a bank and consulted a teller over the past year. It’s clear that the in-person experience still matters.
Now more than ever before, banks must sharpen focus on creating a worthwhile in-store experience. According to JLL, many are redesigning brick and mortar retail locations to focus on, “high-value services like wealth management and mortgage lending, while improving the online experience for more everyday transactions.”
What’s Happening in Your City?
Where does the banking and finance industry stand in your market? JLL’s report features Cincinnati, Cleveland and Columbus financial markets. Check out JLL’s interactive Google map to take the financial pulse of your city.
Below is a snapshot of Cleveland, which includes banks with 50,000 square feet or more, and percent of premium Trophy space.
Bottom line: The banking and finance industry is critical to the future of the U.S. economy. There are more than eight million people working in the banking and finance industry. Plus, it remains one of the top three largest users of office space, according to JLL.
Though firms are moving and their needs are changing, the market is projected for healthy growth in 2015. Interested in learning more? Download JLL’s 2015 Banking & Finance Outlook.
About the Author
Scott Pick is an Executive Vice President for JLL and works out of the Cleveland office. Mr. Pick is responsible for driving the tenant representation group, representing corporate clients in Northeast Ohio. View Scotts’s full bio to read up on his experience, or connect with him on LinkedIn.