At a time when the full impact of AI on jobs in the banking sector is still unclear and hybrid work arrangements have become the standard, banks are being driven to rethink their office space and real estate strategies to adapt to the new technology and the influence of mergers and acquisitions.
"While corporate offices are transforming to support hybrid work, collaboration and specialized talent, traditional bank networks are either shrinking or being reimagined. These shifts are encouraging banks to reevaluate the size, location, and purpose of their real estate holdings," according to the latest report on real estate trends in the banking industry by Cresa, a global commercial real estate advisory firm.
"Banks have started adjusting their real estate strategies to focus on planning for peak occupancy rather than full occupancy," it added – even though the industry has been among the most forceful in demanding staff return to office.
Studies cited in the report predict significant but varying reductions in jobs. Bloomberg forecast a 200,000-person (3%) loss of bank jobs due to AI in the next three to five years. Citigroup estimated 54% of jobs in the industry could be automated, with job loss or the transformation of existing positions possible. Gartner predicted that 52% of entry-level positions could be affected by generative AI compared to only 3% of senior management jobs.
Within the last 12 months alone, employment in the commercial banking sector has fallen by 0.4% or 5,700 jobs, Cresa stated. Jobs in savings institutions dipped 2.7%to 92,000. In contrast, credit union jobs climbed 4.4% to 13,800 and portfolio management added 4.9% to a total of 25,300.
How AI will affect banks depends partly on their size, the report commented, with smaller banks likely to take longer to adjust their workforces, while large global and U.S.-based banks with significant AI investments may cut specific roles but retain a higher percentage of their workforce through redeployment.
Mergers and acquisitions and the consolidation that followed have also affected bank real estate needs, the report stated. The number of FDIC-insured banks has declined by more than half in the last 20 years.
Regulatory scrutiny, rising interest rates and valuation uncertainty drove M&A deal volume to historically low levels in 2023. However, it grew in 2024-2025 as banks moved to improve technology capabilities, spread regulatory and compliance costs, and compete with fintech firms. M&A is expected to continue, especially among small community and regional banks and become a crucial strategy for growth.
This trend, however, can have important effects on banks' real estate holdings. Consolidation may produce overlapping branch networks, office and operations centers that banks may keep, merge or divest to align with their long-term strategy.
Real estate leases, ownership structures and contractual obligations may be revised. Adjusted staffing levels may lead to a reassessment of space requirements and workplace design. At the same time, headquarters, trading floors and technology or operations centers must be kept secure and functioning.
"Overall, the industry is financially resilient but is navigating a transition period marked by technological changes, evolving regulations, and shifts in funding and lending conditions," Cresa commented.
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