The future of the City of London
Is remote working the future?
When the pandemic began to take hold last March and lockdowns were enforced, banks and other businesses alike had to adapt their business models quickly to ensure their employees could work from home. The financial sector has now more or less been working from home for a year and a half.
As lockdowns have begun to ease in the UK and workers are slowly being encouraged to return to offices, many banks and financial services firms have decided to stick with elements of the working-from-home model and allow their employees more flexibility. The question now remains as to whether banks will turn to a full working from home model in the future, whether they will take a hybrid approach or will require employees to return to the office for the full working week. The two former options will certainly lead to cost savings for banks and may lead to banks reducing their office space. Where does this leave the City of London? Will Canary Wharf and London’s financial sector ever be the same after the pandemic?
Goldman Sachs remains in the third category mentioned above. At the beginning of May, the bank announced they would require employees to return to the office by June 21st in the UK and June 14th in the US. The CEO of Goldman Sachs, David Solomon was not the biggest fan of working from home with reasoning that it was hindering the productivity og employees.
However, does working from home actually reduce productivity?
A survey conducted by Humans in Finance found that 63% of employees were more productive working remotely with 18% experiencing a decline in productivity. Productivity was not the only advantage that was seen through working remotely. In fact, 70% said their work-life balance had improved, while 58% reported improved health and wellbeing.
JP Morgan’s CEO, Jamie Dimon has also said he hopes offices will look as they did before the pandemic and is aiming for all employees to be back in its offices by September, since the working from home model ‘does not work for young people’.
Despite some of the biggest investment banks announcing their plans to get employees back into the office full-time, other banks have taken a different approach. Some banks have already permanently changed the way their employees work.
For example, HSBC is cutting its global office space by up to 40% as they have reassessed their business model during the pandemic: “We’ve analysed our worldwide real estate footprint and anticipate a reduction in the order of 40% over the next several years.” The cost savings will not only flow from the reduced office space for HSBC. Over the last year, the bank has cut $600 million from its travel, entertainment and marketing budget as bankers have instead conducted multi-billion dollar deals over Zoom and other video conferencing platforms.
Moreover, Standard Chartered is giving 80,000 employees (around 90% of its workforce) the chance to work away from the office for some of the time, while Societe Generale is considering offering some of its UK workforces the chance to spend up to 90% of their working week away from the office.
Lloyds, one of Britain’s biggest domestic banks is hoping to resume office-based trials with around 5,000 of its staff this summer, once government restrictions allow. The bank also has said it plans to cut 20% of its office space over two years. Further to this, Nationwide and Santander also announced in March that they would reduce their office space, closing four offices and switching the location of its headquarters from London to Milton Keynes.
Many banks are slashing their office spaces as they use the pandemic as an opportunity to cut their overheads and increase their bottom line. Many employees have also benefitted from working from home as they have been better able to balance home life and work as time and costs have been saved from commuting. However, there are also cons to this model, with many staff not being able to benefit from collaborating in person, socialising and networking opportunities.
The remote work debate is still playing out in the world of finance as firms decide whether to ditch the working from home model completely or take a hybrid approach. Remote working has certainly become popular within the last year and the workspace of the future as well as the City of London in general will be different to pre-pandemic times. The workspace is likely to be more flexible for both employers and employees, engaging and driven by technology.
The future of the City of London has already been significantly changed due to Brexit. About 10,000 City jobs, 4% of the total, have either been shifted to various EU centres, or been displaced by firms choosing to add new roles there rather than London, according to an EY survey. This coupled with a shift to remote working may result in the City of London never looking the same again.
There have been predictions from London’s biggest office landlords that the pattern of working will never be the same again. For example, the CEO of British Land, which owns 22.7 million sq ft of floor space, said the company was now assuming that the average worker will spend a full day less a week in the office after the pandemic compared with before. It seems unlikely that employers will be able to force all employees to return to the office full-time and therefore will have to focus on a more balanced approach in which employees can retain the flexibility they had during the pandemic for at least a part of their working week. With pandemic restrictions expected to ease fully on July 19th, many firms will have to decide the future of their working patterns very soon.