How the banking industry is responding to work from home

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Work from home and hybrid work models became the norm during the pandemic, but now the banking industry is ready to turn the corner and enter a new phase.

Many bank CEOs see the end of work from home coming in a matter of years, but other industry leaders are not so sure and still evaluating their next move. Meanwhile, much empty office space lies waiting in limbo.

Read our roundup to find out how the industry is adapting to the shifting work from home sands.

End of WFH is on the horizon, say bank CEOs

The days of working from home in the banking industry are numbered, according to a survey by KPMG of U.S. bank CEOs, with nearly 70% saying they expect a full return to the office within three years.

"Banking executives are at the forefront of the return-to-office and future-of-work conversation," said Peter Torrente, KPMG's U.S. national leader for banking and capital markets. "The focus will only grow as new and evolving models are tested and evaluated in the coming months."

Banking appears to be at odds with other white-collar industries in the U.S., such as asset management and insurance where the figure is much lower, as well as with European banks where work-from-home benefits continue to be regarded as a positive.

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Bank CEOs expect returning to the office will become the norm

Slow decline is predicted for U.S. office values

Bank CEOs may expect the return of full in-office working in their industry within three years, but with companies across the board currently discussing what the future of work will be, a Mortgage Bankers Association report anticipates U.S. office values falling by as much as 20% in the next decade.

The longer-term nature of the decline provides some comfort for banks with large commercial real estate portfolios and exposure to office buildings, as they have anxiously watched from the sidelines during the work-from-home pandemic years.

Judicious monitoring is likely to continue to be the industry's default position as the situation unfolds, as exemplified by Valley National Bancorp president Thomas Iadanza: "We're very conscious of what's going on in the office space and very careful in how we proceed there."

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Office values may see large slump but avoid sudden deterioration: MBA report

Credit unions make plans for the future of work

Working from home during the pandemic has given employees more balance between their work and personal lives, but also less connection to their co-workers, according to a study by Pew Research.

The report has credit unions pondering how best to navigate the future of work. Top of the agenda? Asking the right questions about what's best for both the credit union's members as well as its employees and baking that into a new office/branch strategy.

"As a credit union, are we finding a way to make things easy, are we finding a way to help our members, are we finding a way to help each other, and are we making our communities that we serve a better place?" said Mike Wilson, chief experience officer at Members 1st FCU.

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How credit union leaders are creating the post-pandemic office

On opposite sides of the WFH fence

Umpqua Bank in Portland, Oregon and Segpay in Deerfield Beach, Florida may be diametrically opposed geographically and on WFH, but both have hit upon different, but equally successful strategies that work for them.

"We worked remotely through the entire pandemic and were incredibly successful and actually became more productive — it's an approach that's here to stay," said Kathryn Albright, executive vice president of global payments and deposits at Umpqua.

Meanwhile, under CEO Cathy Beardsley, Segpay has also found success. "We doubled our growth over the last two years, and having everyone collaborating in real time in the office enabled us to keep up with that growth," Beardsley said.

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In-person or remote work? Two payments leaders weigh in.

Lower demand for office space causes concern

Millions of square feet of commercial real estate coming onto the market may not be taken up by new tenants, as companies reevaluate their need for office space in the wake of the shift to remote and hybrid work.

As a result, landlords could be facing an increase in vacancies and a decrease in rental income, while banks with commercial real estate loan exposure will also be impacted by potential defaults on loan payments.

Analysts at Stephens believe that companies that do return to an office environment may well choose a hybrid model, "reinforcing concerns that there will be less demand for office space in the future."

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An office space crisis may be imminent for real estate lenders