Last time, in response to a friend’s comment, I wrote about when, for many, banking stopped being fun. That column received more responses than any other I have written over the past 10+ years; I had hit a nerve. Unfortunately, with a few positive exceptions, the bankers all agreed with the view that banking had changed in some fundamental and perhaps irreversible ways over the past five-ten years.
Why do bankers think their jobs have changed? Several emails pointed in the same direction:
“I have been in banking since 1984, and the external hurdles today are nothing compared to those inside the bank. Fun? Please. Couple that with a disappearance of support staff (not unique to banks I am guessing), and we now spend more time with internal compliance and box-checking than with seeing to clients’ needs.”
This experienced line banker at a major U.S. bank cites two related issues for his frustration. He has become inundated with internal compliance requests many of which result from regulatory requirements. Apparently, at the same time his bank’s management has reduced support staff, precisely the wrong step to take in the face of increased requirements that bind a banker to his/her desk.
Most bankers we know believe that the regulators will continue to closely monitor and proscribe actions for the banks; they are not going to go away. However, management needs to minimize the degree to which they saddle high-priced line bankers with admin tasks. The opportunity exists to limit line involvement and let them get back to banking by better screening of what they are asked to do and by centralizing much of the process. Strong support staff can act as a buffer for bankers and take on much of this responsibility, freeing up much of the line banker’s time.
Another writer commented:
“I think it stopped being real fun in 2010. I have been consulting for banks since 2005. Bankers were always willing to meet with me to discuss ideas – programs they were not doing or needed to ramp up. But in the last few years, it is much more difficult to get a decision. Like you said in the article – it is easier to say no and find someone to back up the decision.”
Little to no reason exists for bankers to stick out their necks and take a chance on a customer or a new business opportunity. While some of nonbanks emphasize trying new things and abandoning those that are not working, banks appear uncomfortable with that approach. Frankly, blaming the regulators for the lack of true innovation in banking today (other than technology plays) often serves as an excuse rather than the driving reason behind the lack in innovation. In many cases management does not support experimentation; in other cases they are self-satisfied with how things are today even though the world is shifting under their feet; in some cases they are simply lazy.
Another banker commented:
“It stopped being fun for me back in 2005 or so while at [name of bank removed to protect the guilty]. I found I was surrounded by great people with good intentions but handcuffed by out of market senior management & policies and procedures that seemed intent on preventing new business from being developed. The box kept getting smaller and the sales demands and pressure kept getting bigger. People who never generated a nickel of revenue were telling seasoned producers how to do their jobs and good lenders became order takers and product pushers.”
When I was a banker 20+ years ago, the line RM was king, no doubt about it. At Citi we had an Operations Officer who supported us very effectively but was definitely a second-class citizen whom we tolerated and certainly never feared. While it may not be a case of the revenge of the nerds, the table has turned at many banks. Support staffs, not only compliance but finance, marketing, and other groups are in positions of ascendant internal power while line bankers have become, in some cases, over managed by these non-revenue producing areas.
However, the line bankers and their leadership may have brought this upon themselves. Line bankers seldom hire FIC and other management consultants that analyze current performance and push for change. Instead, a bank’s President, CFO, marketing head, or other support group “gifts” us to the line, in part in reaction to the unwillingness of the line to reexamine and challenge itself. In many cases support personnel have filled a gap that the line created.
This same writer ended his comments on a positive note, stating that unlike his time noted above at a large regional, he was enjoying working at a community bank:
“I’m having the time of my life here in this little community bank, however and it’s truly fun again. We are nimble and can make decisions quickly and offer unique solutions unbound by encyclopedic policies. It’s good old fashioned plain vanilla lending and deposit gathering.”
However, even here there is a nagging issue: “The issue I lose sleep over is how much longer it can last and with the regulatory environment being what it is I’m not sure we’ll make it to my retirement.” All indications point to banks needing to be bigger to survive future capital requirements and regulatory costs. Unfortunately, the regulators say “We love community banks” at the same time they are hitting them with a hammer.
I was delighted to receive an email from one senior banker that told a very different story:
“The past 4 years have been the most fun in my banking career of 40 years and I would say that if you would ask any of our RMs and most everyone in our company, they would say they are energized and enjoying their work… The turnaround that the company has achieved over this period is really amazing and is really a testament to the team of people we retained, hired and developed over the period. Having stared into the abyss and then successfully restored the company’s fortunes does create a certain sense of euphoria that might not exist if an organization was just muddling through the latest crisis. Nonetheless, what our team has achieved is a testament to hard work, perseverance, and skill as bankers.”
This banker survived a near-death experience that brought his team together. Reading his words you can sense his enthusiasm and envy his hard-won experience. But, banks that are doing well today need to realize that they too are operating in a critical period. Growth has become harder to achieve, capital requirements are growing, competition is increasing, the customer base is shifting, etc. The banker above knew he had a crisis; too many bankers today seem blissfully unaware of what is happening around them.
It all comes back to leadership. No matter the circumstances the best leaders reach out to their people and create a team rather than allowing us to fall into our natural silos. Good managers create an atmosphere that may not exactly be “fun”, but does offer both economic and psychic rewards when challenges are met. Too often, top management either does not recognize or address the internal and external challenges they face, resulting only in frustration for the lower ranks.