Recently, I ran into a former colleague who was bemoaning that he had been fired. His misfortune was cushioned by a multi-year salary payment, continued health care insurance and full vesting of stock and options – not bad. But he also volunteered a comment that was very telling. His job, he said, had stopped being fun a decade ago when his boss left and was replaced by someone who “never got what we did and never really supported us with top management.”
His comments could have been expressed by many in the banking industry today. Some bankers are simply hanging on, not enjoying their jobs but sticking around because of economic necessity and lack of choice. But for the recent economic downturn, they would already be retired.
After I first published this anecdote in a blog post, I received several comments in the following vein:
“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.”
As you can see, this line officer at a major U.S. bank cited two related reasons for his frustration. First, he has become inundated with internal compliance requests, many of which result from regulatory requirements. Second, his bank’s management had reduced support staff, precisely the wrong step to take in the face of increased requirements that bind a banker to his/her desk.
An industry consultant provided a similar perspective, focusing on the difficulty of getting bank management to consider new approaches:
“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.”
So, what’s going on here? Clearly, too much regulation is gumming up the works. With the rise of the compliance officer as decision-making king, and the willingness of some senior bankers to abdicate responsibility to these folks, significant risk taking has ground to a halt at many institutions. This leaves many bankers feeling that it is better to delay or make no decision about an opportunity versus making the wrong decision.
Decision-making within banks today requires more voices to be heard than ever before, with some of those voices seemingly only able to say “no” or raise somewhat arcane objections. Obviously, I am not dismissing the need to follow regulations and be viewed as spotless during a bank examination. However, a “gotcha” mentality exists within some institutions whereby certain functional groups have become excellent at raising objections without feeling the obligation to offer solutions. That negative approach creates a debilitating environment.
When I was a banker several decades ago, commercial bankers, being revenue producers and client-oriented, functioned as mini gods with support staff very much subservient to them. (Of course having credit and risk staff subservient to lenders can ultimately result in BIG problems.) But the point is, back then it was fun to be a relationship manager. At Citibank, my group worked with an Operations Officer who supported us very effectively but was definitely a second-class citizen whom we tolerated and certainly never feared.
How times have changed! While it may not be a case of “revenge of the nerds,” at many banks the tables have definitely turned. Support staffs, not only compliance but also finance and marketing, are in positions of ascendant internal power while line bankers have become, in some cases, over managed by these non-revenue producing departments. Actual bankers have become mouse-like, following the trail set for them by detailed sales management processes and highly specific metrics; their degrees of freedom have become very limited.
In this environment, little to no reason exists for bankers to stick out their necks and take a chance on a customer or a new business opportunity. Yet, it must also be said that blaming the regulators for the lack of true innovation in banking today often serves as an excuse for inaction. In some cases, managers have become complacent or simply lazy, even as the business environment shifts under their feet.
Fortunately, there is hope. Comments that I received from community bankers, particularly those who have fled larger institutions, suggest that they continue to view their jobs as impactful. Even they, however, see trouble ahead: “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.”
What’s the solution? Commercial banks should be “fun” places to work. Banks provide a critical service and have the best interests of their clients in mind; most bankers themselves operate with sincerity, honesty, and commitment, despite the negative headlines of the past decade. True innovation and appropriate risk taking can and must make a comeback. Doing so requires that senior managers assert themselves by questioning current compliance requirements, providing necessary support and refocusing bankers upon clients and their emerging needs.
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.
Mr. Wendel is president of New York City-based Financial Institutions Consulting, Inc. He can be reached at firstname.lastname@example.org.