Welcome to the Twin Cities, the (potential) back-office capital of the upper Midwest.

Hey, it could happen. In fact, some corporate consultants say the Twin Cities metro is well positioned to become a national or even global destination for banks and financial services companies that are looking to relocate their back-office operations to cheaper surroundings. Think of accounting, IT, cyber-security, payroll, records maintenance, payment processing and the like.

Those back-end operations — which don’t require face-time with clients — don’t necessarily need to be housed within the typical corporate, big-city headquarters. They’re happy on their own in smaller-market suburbs, provided there’s a wealth of talent nearby.

John Boyd, Jr.

“Since 2015, New York City has lost more than 30,000 banking jobs to smaller markets like Nashville and Salt Lake City,” said corporate relocation consultant John Boyd, who frequently works with economic development groups such as Greater MSP to help them compare the costs of doing business in different regions of the country.

Boyd says key changes in the financial services industry — including recent banking deregulation moves that could lead to a wave of new mergers — make it more and more likely that back-end services will be relocated out of financial hubs like London, New York, San Francisco and Chicago to surroundings with cheaper overhead, lower labor costs and an educated workforce.

The Twin Cities may not be an especially low-cost market — it’s more like middle of the road — but the metro offers all three criteria in spades, according to a new report from Boyd and the Boyd Co. The Princeton, N.J.-based consultant has been flying into Minneapolis-St. Paul International Airport with greater regularity.

“(High-end), ‘Class A’ office space in Midtown Manhattan can approach $170 per square foot,” Boyd said in an interview last week. “Here in the Twin Cities, you can negotiate $30 per square foot.”

The Twin Cities metro also offers something bankers used to fear but are now embracing: access to artificial intelligence. Industry insiders say it won’t be long before as many as a third of financial services jobs are replaced by robots and computer programs. And that side of the industry won’t be designed by bank tellers or accountants. It will be assembled, maintained and expanded by technologists.


If cities market themselves correctly, Boyd says, automation could make markets like the Twin Cities metro future power players in the banking industry, given their proximity to the University of Minnesota, which is on the cutting edge of artificial intelligence research. But they already face stiff competition in Montreal.

“I don’t think people realize the degree to which AI is playing into site selection today,” said Boyd, pointing to Boston-based State Street’s and New York-based Morgan Stanley’s decision to move 2,000 workers to Montreal. “The University of Montreal has the best AI program in the world. You’re competing with Montreal more than people realize.”

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