The talent gap is affecting every industry, and commercial lending is no exception. The commercial lending space is mentally taxing, requires hard work, and can be a hard sell to younger members of the applicant pool. This last component is so challenging for commercial lending managers that it’s their primary barrier to growth.
The formal credit training programs run by large banks in many commercial lending markets in the ’80s and ’90s have, for the most part, been shutting down since the beginning of the 2000s. The lenders and underwriters who came up through such programs are reaching retirement age, and replacing them has proven difficult.
In addition, commercial banking is often viewed in a negative light along with investment bankers, buy-side analysts, and sell-side analysts. Media portrayals like that in the movie “The Big Short” have fed into this perception. This doesn’t help commercial banks attract candidates who are already being recruited by fintech companies and other startups that may be seen as a cooler, more profitable opportunity.
But the situation doesn’t have to remain bleak. Here are four ways commercial lenders can find—and retain—the key talent they need:
- Build alternative recruiting relationships. Formal credit training programs may no longer be standard, but that doesn’t mean commercial lenders should forego other methods of building up a talent pipeline. Cultivating strong relationships with local universities is critical for recruiting new talent. Line-of-business managers or their senior counterparts can serve as guest lecturers for local finance professors, teaching students directly about the realities of commercial banking, including the intellectual challenge put to analysts of deciding whether to lend to a company and under what circumstances. A role on local campuses also gives bankers a chance to identify students with high potential for critical roles like relationship managers or underwriters. Offering these students internships is a good way to provide on-the-job training and real-world experience that can lead to full-time positions come graduation.
- Implement a solid recognition program. Commercial lending is not an easy field to work in. It’s highly demanding on employees both intellectually and emotionally; it is essentially a sales job and comes with both the competition and rejection commonly experienced in sales roles. Recognizing hard work and key achievements, whether that’s through a public recognition program or more informal means, can go a long way toward making employees at all levels feel valued by their organization.
- Enable employees to do their work efficiently. One issue that leads to heavy attrition for banks is hiring new talent to work in a relationship management or credit analysis role—only to have that employee then spend very little of their time on credit analysis or relationship management, leading to a nosedive in morale and their eventual departure. Good employees want to be productive, so enable them to do just that by leveraging solid processes and modern technology. If the onboarding process is dysfunctional, that gives employees less time to field loans, close deals, and make money. Streamlined operations allow people to do their jobs efficiently. Similarly, better tools that can enable greater visibility into borrower relationships, for example, will help newer hires know how their work is helping the bottom line.
- Offer competitive compensation packages. Commercial bankers are good at both researching and networking; it’s how they field and close loans, after all. While a small salary increase offered by a rival lender is unlikely to make top talent switch jobs, keep in mind that employees are well-informed about where their salary falls in the market. If they aren’t receiving what seems like adequate compensation, there is no guarantee that they will continue working for you.
Commercial banks are deep in the throes of a competition for top talent. It’s not uncommon for loan officers or underwriters to receive an external recruitment offer each month. Employing the strategies above can help commercial lenders both attract new talent and hold on to the talent they already have.
To learn more about how talent issues are impacting the entire financial services ecosystem, read The Great Resignation and Resulting Talent Gap or reach out to me at [email protected].
