Building an AI Team Means Hiring Where the Talent Is, Not Where Your Bank Is
By Steve Cocheo, Senior Executive Editor at The Financial Brand
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Executive Summary
- AI is taking over the banking business, but every institution must find its own way to recruit and retain the talent that will keep it in today’s game.
- Research by Jones Lang LaSalle indicates those goals demand putting technology offices in AI talent hubs — often not in the bank’s own territory.
- The secret is balancing the immediate need to draw from talent hubs while maintaining the flexibility to meet whatever’s coming next.
As the banking industry’s adoption of artificial intelligence continues to ramp, banks’ demand for specialized talent is not only driving many of the industry’s real estate needs and decisions, but creating competitive pressure for the supply of appropriate space.
What’s shaping up is something of a game of musical chairs, where the winners of each round will gain further advantage over the laggards.
And as younger generations of talent increasingly become the industry’s core workforce, keeping candidates happy is becoming intertwined with the subtle branding messages that a bank’s choice of location and usage of space imply.
A study by commercial real estate services firm Jones Lang LaSalle points to evolutions in how even midsize institutions will be thinking about office space and setup. Ripples from those actions will in turn impact smaller institutions.
“This is going to affect all banks. Individual institutions’ priorities are going to be a little bit different, but there is a trickle-down effect because AI is changing the banking business — period,” says Erin Haglund, managing director, financial services, at the firm. “Everybody’s going to have to figure out how this trend changes their business.”
Haglund adds that the challenge will be different for say, the top ten banks versus other big banks and regionals, versus smaller institutions. But she says the war for talent, and for space to let it flourish, will affect everyone.
People Paradox: Better Automation Demands Human Proximity
The implications are affecting banks technologically and culturally, according to the research. Much of the adaptation of banking to AI approaches requires close collaboration between AI talent with people who understand how the banking processes involved need to work.
This will put people closer together, literally, to facilitate both quick and in-depth but always frequent interactions to make collaboration work — paradoxically, increased automation needs more face-to-face dealings at the formative stages. However, the “where” of the space will also hinge on where AI and innovation talent can be recruited, where that talent is being bred and wants to work, and the types of offices that talent will be attracted to.
Increasingly banks seeking the right spaces will face the need to build or lease them, or adapt lesser space into offices for AI development. A related trend is further internationalization of U.S. bank staffing, putting new offices for American banks into foreign locations to take advantage of pools of talent in those countries. Unlike outsourcing, this entails banks hiring in those markets and using the talent in place to develop technology for application back home.
The Jones Lang LaSalle report, “Financial Services Portfolio of Tomorrow,” also portrays an ongoing period ahead where banks’ commercial real estate use plans will have to include considerably more wiggle room than they once did. Today’s scramble for the right space results in part from the boom in AI technology types that many didn’t see coming.
“Real estate takes time,” says Vijay Jesrani, managing director and U.S. financial services sector lead. “We’re recommending to our clients that they build in flexibility — whether that’s in leasing terms, the physical space itself, technology solutions on site, etc. Banks’ spaces can’t change overnight, but they have to be adaptable.”
Adaptability is already evident among banking’s workforce, according to Jesrani.
“Bankers have been surprised about how adaptable to change their employees can be,” Jesrani says. “Everyone went home during the pandemic, but now everyone’s back in the office.” That and other conforming to new trends, are all part of the shift in space decisions.
Read more: Four AI Action Plans to Supercharge Your Marketing Team’s Impact
Don’t Think ‘Cities’ — Think ‘Talent Hubs’
Traditionally when banks considered their needs for office space they hewed to generally accepted ideas about real-estate lifecycles, according to Haglund. Now the picture has to be multidimensional, and options may have little to do with the institutions’ actual banking footprint.
The pressure to adapt AI to banking (and vice versa) has expanded the conversation beyond the usual factors. Proximity to universities with AI programs, fintech labs that represent potential partners and more will dictate key spots for developing AI efforts and coordinating them with other parts of the bank.
“Now banks are having to look at where the AI talent hubs are and where the pipelines for that talent are. Do they have offices in those locations, or must they spend time to explore and set up there so they are ready to cultivate and capitalize on the talent?” says Haglund.
“Talent” in this regard means much more than coders.
“Banks are also recruiting for emerging specialties in responsible AI and AI governance, ensuring that their AI initiatives are ethical, compliant and risk-managed,” the report says. “As ‘agentic AI’ — autonomous AI agents — and generative AI gain traction, firms will need experts in these cutting-edge fields too.”
The report also stresses that AI has rapidly evolved away from being a “frontier initiative” to a core activity that will touch on most aspects of the business.
Some parts of the U.S., such as New York City, will continue to be talent hubs as AI demands drive recruiting efforts. But the report points out that other areas will rise in importance to the banking industry as it seeks homes for hubs that will produce. In the U.S. some of these cities are Atlanta, Austin, Dallas and Seattle.
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How These Trends Impact Banks Beyond the Top Tier
Jesrani says some midsize, regionals and super regional banks have entered those markets to slake their demand for AI-related talent.
Haglund points out that among that range of institutions another filter for siting technology offices is the outlook for mergers and acquisitions. (The Trump administration is widely seen as being friendlier towards M&A among larger institutions.)
“They’re balancing those market-driven and talent-driven decisions with their long-term plans to either be acquired or make acquisitions,” says Haglund. “As they look down the road, that’s going to help them determine what markets they want to be in for talent, where they want their brand to be visible, and where they want to invest in in order to either be visible or to look like something someone else wants to invest in.”
She says this is a different balancing than the largest banks, unlikely to do large M&A, go through.
Decisions don’t stop at the border anymore. Jesrani says that savvy banks look for pockets of talent as well. “When, say, you have someone in Mexico who’s able to develop an incredible AI algorithm that can be applied everywhere, that’s where we’re seeing a lot of growth,” says Jesrani. Other such locations include Toronto and Bangalore.
“Banks are contemplating their global strategies because emerging markets can provide them with talent and capabilities that they may not be able to obtain in the U.S.,” says Haglund. “Or there may be things happening in those markets that they need to be a part of in order to advance their core business capabilities.”
Read more: When It Comes to AI, ‘Wait-and-See’ May Mean ‘Wait-and-Die’
Balancing Talent Hub Thinking and Affordability
Not every building available in every market offering a stream of fresh AI talent is going to be affordable for the player and as up-to-date as it needs to be.
Haglund says there are hot spots that many players want to be in — one is Manhattan’s comparatively young Hudson Yards neighborhood. Not all banks can afford such space.
In some prime talent hubs, some work will be needed to adapt existing supply to the demands of AI development.
“But you don’t have to get new,” says Haglund. “You can go in and renovate. Maybe it won’t start as class A space, but it’s B+, and you can renovate and make it more like that.”
“You also have to design the space to be flexible so it can change over time without having to tear things down and start from scratch,” says Jesrani.
Overlaying the immediate need for AI-friendly space are additional factors.
One is environmental and sustainability concerns and commitments. A bank may be committed to such goals at a corporate level, for example. In this regard, Haglund says many banking clients put a premium on “green leasing.” This refers to rental agreements in which the banks agree to certain environmental, conservation and energy use goals. Part of the agreement includes incentives to toe the line.
To many of the young people representing the talent in the talent hubs, such commitments by themselves are an important consideration. But so is the building itself. Internal air quality, amenities, office plans and finishes all go into the overall package that prospective hires see. Anything impacting on wellness must be considered, says Haglund, because Generation Z especially puts a premium on that.
The recruitment-minded bank has to take all of that into account.
“You’ve got to choose space that’s actually going to attract and retain the talent that you’re there to get,” says Haglund. For some clients, she adds, the price tag to obtain, and maintain, such space is a bit of an eye-opener. Jesrani says a layout that stands in the way of collaboration will get old with employees pretty quickly — inadequate meeting space is a problem, for example, as is lack of ergonomic facilities.
Read more: Falling Behind on AI? Here’s How Banks and Credit Unions Can Catch Up Fast
When Urban Hot Goes Cold, Not Cool
A tougher challenge is the changing opinions of employees and prospects.
Haglund says that markets can go through evolutions, such that yesterday’s hot neighborhood goes cold for some reason. Or a neighborhood half a mile away is the new hot place to be for young techies.
Here is where the art of the creative real estate deal comes in. Commercial real estate contracts are big bundles of give and take. The report stresses the need, as banks stake out positions in talent hub spots, for structuring deals that will grant ultimate flexibility. This is imperative given the increasingly uncertain forward picture for banking strategies.
Jesrani says deals where capital expenses are shared between landlord and occupant can work out well for both parties. The bank gets a better experience for its employees in the present and the landlord gets better space that will command a higher rent when the bank moves on.
Ultimately, the real estate blocking and tackling is about the ultimate purpose of the space.
“If you get the talent in that market, but the space doesn’t allow them to be creative and product, there’s no reason to be there,” says Haglund. “You’ve missed the goal.”
