Changes in the office
Covid will see flexible working for nine in ten staff
Office working will change for many employees
Almost every financial services company expects to introduce an element of home working as a permanent feature as a result of the Covid pandemic.
A new report from Lloyds Bank says nine in ten (89%) financial institutions plan to maintain flexible working patterns for employees.
Eight in ten (81%) expect to use digital platforms like Microsoft Teams and Zoom to liaise with clients. Two-thirds (68%) will use new technology to automate more work.
The findings are included in Lloyds Bank’s fifth annual Financial Institutions Sentiment Survey, which gathers views from major banks, asset and wealth management firms, insurers and intermediaries.
The figures follow recent reports that big firms such as PwC, Standard Life Aberdeen and Schroders expect to have fewer staff in their offices.
Property agents argue that offices will remain in demand, but will be re-purposed around meeting spaces.
A new report from Savills reveals Glasgow has one of the most acute shortages of available office space of all the Big-Six regional cities (Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester).
With less than six months of Grade A office supply available, relative to annual average take-up levels, Savills says Glasgow is in critical need of speculative office development.
Data from Savills shows office take-up in H1 2020 in Glasgow (city centre and the surrounding area) totalled 378,770 sq ft, exceeding H1 2019 volumes by 18%, demonstrating ongoing appetite by businesses for office space in the city despite challenges brought about by the Covid-19 pandemic. The firm expects total city centre take-up to reach circa 500,000 sq ft by the end of the year.
What this huge home-working experiment has taught us is not that the office is dead – far from it – but that its role needs to adapt– Steve Lang, Savills
David Cobban, head of Savills Glasgow office and director in the business space agency team, said: “Since 2018, Glasgow has seen some of its strongest ever take-up, and although Covid-19 has caused this to slow, there is still a significant level of demand in the city. The disruption in the market hasn’t reduced the number of requirements, but rather the size of requirements.”
Acknowledging the switch to home working, Savills says 61% of respondents would like to spend at least two days a week working from home when lockdown measures are lifted. This compares to 19% pre-lockdown.
Steve Lang, director in the research team at Savills, adds: “The Covid-19 pandemic has upended normal life in countless ways, not least the switch from commuting to the office to working from home.
“What this huge home-working experiment has taught us is not that the office is dead – far from it – but that its role needs to adapt. Where office design used to be all about desk space, new working patterns mean organisations will need flexible spaces focused on collaboration and team-building. Its likely occupiers will need the same size of space, but they will use it in new and different ways.”
Confidence remains high
The Lloyds survey found that confidence among financial services firms remains reasonably high, with six in ten (62%) senior leaders at financial institutions expecting to maintain or grow their revenues over the next 12 months.
Although this is down from 80% in 2019, the figures indicate many firms expect their business to show resilience despite disruption caused by Covid-19.
Furthermore, nine in ten (90%) say their firm’s Brexit preparations are on track and two-thirds (64%) plan to maintain current staffing levels or create jobs (2019: 90%).
However, the relative confidence relating to revenue and Brexit preparations comes as institutions’ growth expectations for the financial services sector and the UK economy continues to deteriorate year-on-year.
Two thirds (68%) of respondents expect UK economic growth to slow in the year ahead, compared to 58% in 2019 and 29% in 2018. A similar proportion (62%) expect growth in the UK financial services sector to slow over the same period (55% in 2019 and 27% in 2018).
Adrian Walkling, head of financial services at Lloyds Bank Commercial Banking, said: “A drop in confidence in the sector’s growth prospects compared to last year reflects how financial institutions are feeling in the midst of unprecedented disruption caused by Covid-19.
“Firms have spent the past decade de-risking and modifying their business models with the aim of increasing their resilience. The next 12 months will be critical as we see how effective those defences are for financial services and the wider UK economy.”
The impact of Covid-19
The coronavirus pandemic is seen as the top risk to financial institutions, as cited by 62% of business leaders – ahead of economic uncertainty, new regulation and Brexit, which was listed as 2019’s top risk.
Despite concerns over the economy and their prospects, firms remain committed to a focus on environmental sustainability and sustainable finance over the next three years, with 63% saying Covid-19 will have no impact on their strategies. Only 16% admit they will focus less on sustainability.
Mr Walkling added: “Our findings show that Covid-19 is accelerating the use of technology to help firms adapt to new working patterns.
Financial institutions are working hard to find ways to give their employees the flexibility and freedom to choose how they interact with each other and their clients and adapt to these new ways of working.
“For all the challenges we have faced through the pandemic, one of the most positive steps taken by financial institutions has been the rapid roll out of technology for staff across the sector and the commitment to experiment with new ways of working.”