Financial services have traditionally been highly centralised in a handful of international city centres; but to some extent, yet to be determined, things will be different after the COVID-19 lockdown. It is almost certain that working from home (WFH) will feature more prominently in the FS landscape than in the past.

The COVID-19 pandemic, with its swift and near-total shelter-at-home restrictions, represents a massive forced experiment in WFH for the entire FS industry. Going forward, the experience of widespread home-working during lockdown gives the industry a chance to reflect on its working environment and its physical footprint in city centres.

Working from home: A positive experience for most

To date, working from home has been a more positive experience than might have been expected, at least for most Financial Services (FS) employees. 70 per cent of respondents to our survey rated their WFH experience as either positive or very positive, compared to just ten per cent who had a negative view. At this stage of the lockdown there does not appear to be any noticeable difference in views between individuals in junior, mid-ranking and senior positions in their organisation.

Figure 1. Overall experience of working from home

On the face of it, these are very surprising findings. While FS firms have had to have Business Continuity Plans in place for years, the speed at which nearly the entire workforce had to switch to remote working was both unexpected and unprecedented. Such plans often relied on a move to a single remote site, rather than wholesale home-working. So some staff would have had neither the kit nor the environment required to work effectively.

Furthermore, it might have been that the pandemic would have increased work pressures and so would have created a more negative experience for many people throughout financial services. 

While, unlike in 2007-09, financial services is not at the epicentre of this crisis, it has been hard hit in a number of ways. 

Each sector of FS has faced its own operational challenges. At the outset of the pandemic, retail banks were hit by a wave of requests for forbearance, from both retail and business clients, and for emergency government loans. 

Insurers were deluged with travel and business interruption enquiries and claims.

Investment bankers had to wrestle with extreme market volatility: the incoming Bank of England governor, Andrew Bailey, described conditions in the gilt markets as “bordering on the disorderly” on Thursday 19 March.

And investment managers had to wrestle with plunging equity indices while also reassuring investors to whom they were obliged to send out multiple 10% drop notices under the MiFID II directive, until the Financial Conduct Authority issued a forbearance note on 1 April. 

Moreover, all had to deal with Bank of England’s decision, just before the UK went into lockdown, to cut the base rate to just 0.1%, the lowest in its three-century-plus history.

These super-low interest rates present particular problems for both banks and insurers. Banks traditionally make money on the ‘turn’ between the rates at which they borrow and the rate at which they lend, the net interest margin. This is squeezed when interest rates are low.

Insurers’ future liabilities to pay clients, especially pensioners, is calculated by ‘discounting’ these future payments using interest rates. The lower such rates, the bigger the expected liabilities.

These challenges to FS business models are arguably one reason why share prices across the industry fell by more than the FTSE100 index.

So why has working from home been so positive for FS?

Respondents to the survey who indicated a positive experience to WFH were asked to identify the main reasons for this (up to three reasons). By far the most common response was ‘not having to travel to and from work’, and some individuals added not having to travel to business meetings as another top reason.

This is an interesting finding. The absence of the commute obviously liberates time, but given that the proportion of respondents citing not commuting is higher than those citing having more time for other things, like spending it with family, exercising, or working, suggests that respondents find the experience of commuting in itself unpleasant.

Anecdotally, some workers enjoy their commute, not least because it provides a temporal and spatial barrier between work and home. A commute can be enjoyable in itself if travellers are able to use their time productively, e.g. to read, work or listen to podcasts.

But clearly most respondents in our survey do not enjoy commuting. FS workers probably travel during the rush hour, when public transport is very crowded. Commuting into central London is also costly by international standards. It can also be time consuming and unpredictable. 

An additional reason for feeling better working from home during the pandemic may be that it allays concerns of travelling by public transport or when in the office. This concern will hopefully diminish over time.

Figure 2. Top reasons for a positive working from home experience 

The other main reasons why WFH has been a positive experience for many relate to flexibility in the daily work schedule – choosing when to work – and other ways of making use of the extra time in the day – spending more time with the family or exercising. One respondent commented: “I'm an owl naturally and I've been able to get up later and go to bed later.” 

Attitudes to WFH may well be shaped to some extent by a sense of ‘we’re all in this together’. Most people are in lockdown and so are sharing similar experiences. As more people return to the office post-lockdown, a sense of ‘them and us’ may emerge, and result in some change of views among those still working at home.

Employee attitudes are important to companies. But from the employer’s perspective, the impact of WFH on business performance must also be considered. Most employees may be having a more positive experience, but is this making them more efficient – and more effective – in their job? 

Perceptions of productivity

Our survey tested perceptions of the connection between WFH and productivity. Overall 38 per cent of respondents said they were more productive working at home than in the office, and 24 per cent thought they were less productive. 

Figure 3. Overall productivity change, working from home vs. working from the office prior to lockdown

This may seem surprising, given that home working was thrust upon people at short notice, so with little time to prepare, and that the home environment is not necessarily conducive to sustained working. For many, the experience of WFH has come at a time of disruption to family life as a result of school closures and the need to look after children in a restricted domestic setting.

One respondent commented, perceptively, that WFH “has forced me to re-think ways of how to do my job.”

Commuting and (perceived) productivity

As with positivity, the key contributor to (perceived) productivity is the fact that less time is spent travelling, with 72% of those who feel more productive WFH citing “no commute” as one of the main reasons.

Figure 4. Top reasons for being more productive working from home vs. working from the office prior to lockdown

There are some important caveats to these survey findings.

Productivity in its ‘traditional’ sense measures units of output per unit of input (time). It seems that respondents may feel more “productive” when, in fact, they are simply working longer. One respondent commented about the time saved by not commuting that “two hours travel time is now work time.”

  • Productivity improvements may be harder to pinpoint than declines in productivity, which several respondents called out. One respondent commented that the market had slowed down, so there was less work to do. Another felt the lack of information flow from casual interactions with colleagues at work, and a senior manager pointed to problems with ‘managing my team’, as reasons for loss of productivity.
  • Productivity (efficiency) is not the same as achievement (effectiveness). Companies need to consider the effect of WFH on business development and growth, competitiveness and decision-making generally. Where does the drive to improve – the ‘buzz’ of idea generation – come from when people are working in isolation from colleagues and other associates, at home?

It is widely believed that some tasks can be performed more efficiently at home – assuming that it is quiet –than in a busy office. We delve deeper into the types of activities that respondents found more productive while WFH in a later blog.

We did test whether positivity and perceptions of positivity while WFH were related, but found only a weak relationship. 

We believe that in planning the way forward, FS companies should consider five factors. We explore each of these factors in our The future of the city blog series.


This blog is based on a survey of 501 employees working in financial services in London, which was undertaken by YouGov on 5 to 11 May 2020.