Banking and financial services industry set to become largest investor in AI Tech
To support their digital strategies, the banking sector is growing rapidly in new markets and evolving its real estate portfolios to enable more significant investments in technology
Kimberly Steele | JLL
April 27, 2023
Banks and financial services companies are prioritizing and strengthening their investments in technology to increase speed, resiliency and drive cost efficiency. According to JLL’s new 2023 Banking and Finance Outlook, the current landscape guides financial services organizations to accelerate their digitalization efforts to combat challenges. These companies are anticipated to spend an additional $31 billion worldwide by 2025 on artificial intelligence (AI), meaning the banking and financial services industry will deliver the largest AI investments in 2023.
“Banks are actively enhancing their digital strategy by adopting new automated solutions to improve efficiency and provide better experiences for clients and employees,” said Giles Wrench, Vice-Chairman of Financial Services, JLL. “AI tech and machine learning are transforming the banking industry and enabling organizations to remain competitive and relevant.
Despite rising operating expenses, there has been enormous growth in the adoption of technology, data platforms and AI tech systems to optimize costs, define new growth models and enhance the customer and employee experience. Many organizations have already incorporated AI tech into their daily business operations and employ tools like AI-powered virtual assistants for customers.
Technology helps banking and financial services organizations stay ahead of regulatory changes, evolving customer needs and growing competition since accelerating digital innovation improves operational efficiency and unlocks new sources of value. As such, a strong real estate strategy that provides the necessary infrastructure to support advanced technologies is vital.
“The right real estate strategy can enable banks to attract and retain top tech talent, provide the necessary infrastructure to support advanced technologies and create a flexible and agile workplace that can adapt to changing business needs,” said Bobby Magnano, President, Financial Services, JLL. “By aligning real estate strategy with broader corporate goals, banks can ensure that their real estate portfolio is optimized to support their tech transformation and other strategic priorities. Ultimately, the success of a bank’s tech transformation will depend on a holistic approach that includes not only technology but also real estate strategy, talent management and other key factors.”
Attracting top talent with workplaces that foster innovation
To keep up with the rapid pace of AI tech advancements, financial institutions are prioritizing hiring objectives to gain expertise in cloud computing, AI tech, machine learning and programming. Software developers are now one of the most in-demand roles in the industry, and since 2018, the largest banks have increased hiring for software developers and data scientists by 90%. In addition to software development, cybersecurity and risk management are in high demand as banks face increasing regulatory pressures from the U.S. Federal Reserve and FDIC to improve risk infrastructure and internal governance.
“While most of the largest financial services organizations contracted since the onset of the pandemic, leading firms also restructured their real estate portfolios to support their future state operations, selectively expanding in key markets that offer scalability and affordability of diverse tech talent,” Wrench added.
Finding that talent is getting more difficult. A global shortage of key talent is higher in North America (51%) than other regions and the worldwide average (45%). Dallas has seen the biggest increase in financial services employment jobs (14%) since 2019 outside of New York, followed by Miami (12.5%) and Detroit (7.6%).
“New York City undoubtedly remains the epicenter of the global financial services industry,” said Sarah Bouzarouata, Senior Manager, Research, JLL. “However, there has been a shift in financial services employment to more cost-effective and growing markets such as Dallas, Phoenix, Atlanta and Miami. The key question is…READ MORE
