The Boyd Company, a New Jersey-based independent location counsel to corporations including Dell and GlaxoSmithKline recently released a report comparing the cost of operating a banking & financial services back office in London compared with nineteen other banking hubs across the UK, Europe and North America, including Leeds. Considering Brexit, variations in regulatory and compliance expenses across countries and the upstart of fintech players, banks are more than ever looking to AI and considering the bottom line when looking at locations for operations. So, which spot fares best and where does Leeds sit in the ranks?
Whilst London and New York remain the two global capitals in the banking & financial services industry, migration towards up-and-coming FS hubs is increasingly popular. This is unsurprising considering the huge diversity in operation costs between hubs. Between the most expensive city to operate a back office (San Francisco), and the least expensive (Warsaw, Poland), there is a huge $8.9 million per year difference in operating costs. The operating costs can vary even between some of the main hubs with London $2.4 million cheaper than San Francisco and 15.1% less expensive than New York.
Outside of the main hubs, popular spots include Paris, Frankfurt, Amsterdam and Montreal.
Where does Leeds sit? Leeds sits in a fairly sweet spot in the ranks. Most major banks already have a strong presence in Leeds and Santander and Barclays are closely connected with the University of Leeds. It would cost a bank around $2m less per year to operate in Leeds compared with London. Whilst annual base payroll costs are high in Leeds compared to say, Paris, the cost of renting an office in Leeds and the cost of corporate travel are significantly smaller than in London and Paris making overall operating costs much cheaper.
Further, Leeds has a prominent AI academic programme. Courses at the University of Leeds such as cognitive robotics, coding, computer programming and the creation of mobile apps has lead to a large pool of AI talent in Leeds. This will increase the attractiveness of operating a bank in Leeds. Not only is a move from London to Leeds more attractive for businesses, talented workers may also be drawn north due to significantly lower costs of living in terms of for example, property prices as well as less congestion, pollution yet still well-connected and urban.
Find the full report here.