As banking evolves, industry eyes new generation of workers

RAISING THE BAR: Heather Manchester, seated, of Fall River, in the new Technology Bar with Branch Manager Milena Mello at BayCoast Bank in Dartmouth. / PBN PHOTO/MICHAEL SALERNO
RAISING THE BAR: Heather Manchester, seated, of Fall River, in the new Technology Bar with Branch Manager Milena Mello at BayCoast Bank in Dartmouth. / PBN PHOTO/MICHAEL SALERNO

Prior to a series of acquisitions in the 1990s and being purchased by Bank of America in 2004, Fleet Financial Group, formerly Industrial National Corp., was known regionally for its Providence-based banker-training programs.

The programs, also run by other large institutions nationally, pumped young professionals into the banking industry each year. But by the late 1980s they started disappearing locally as banks increasingly consolidated in response to economic pressures, according to the Massachusetts Bankers Association.

“The training programs were the feeder of the workforce pipeline,” said Bruce E. Spitzer, the bankers association’s director of communication. But fewer institutions translated into fewer jobs within the industry. And there was concern too, according to local bankers, about poaching of trainees by smaller banks unable to afford their own training programs.

Fast-forward more than two decades, however, and a graying workforce, changing customer habits and competition for prospective hires from higher-profile industries have prompted some local banks to reinstitute or establish training programs. Others, wrestling with shifting industry dynamics that include a national decline in brick-and-mortar banking, are looking to the state and higher education for help in developing programs to train the next generation of local bankers.

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And many of those workers will need different skills than their predecessors did just a decade or two ago.

Nearly 48 percent – or 3,755 – of those employed within Rhode Island’s depository credit industry, which includes commercial banking, savings institutions and credit unions, are 45 years or older, according to data collected by the R.I. Department of Labor and Training. This represents a 22.6 percent increase compared with a decade earlier.

The total number of people within the industry during the same period has also decreased by 500, from 8,410 in 2004 to 7,910 in 2014. And while there was one less financial institution in Rhode Island last year than there was in 2004, the number of bank branches has increased by 28 locations, to 261.

“I’m concerned about the long term of this because banking is not a very sexy industry,” said Anthony Botelho, president and CEO of Smithfield-based Freedom National Bank and incoming president of the Rhode Island Bankers Association.

“Kids get out of school and want to go work for Google or on Wall Street and traditional banks are just not as appealing,” Botelho said. “So it’s a challenge and the generational gap has to be addressed.”

FILLING RANKS

Paul H. Hanley was studying accounting at Bryant University in 2012 when he met with Citizens Financial Group Inc. representatives who had come to campus in search of young talent.

Hanley, drawn to what Citizens had to offer, says it was then he decided he wanted to join ranks within the banking industry.

So what did Citizens offer?

A job, for starters, but also an opportunity to participate in a yearlong professional training program that started that year. Hanley and a handful of peers spent a year rotating between different divisions within the bank, learning the ropes and getting a feel for where they would fit in. The process landed Hanley in corporate finance, where he’s now a senior financial manager.

“Very happy,” Hanley said of his career choice. “It’s a new fire drill every day, which is challenging and enhances the learning process.”

Citizens, now in its fourth year running training programs, is leading the charge regionally in bringing back the in-house programs and investing in the next generation of financiers to fill the workforce pipeline.

The bank is looking to Hanley’s generation to bolster talent in its commercial, finance and audit divisions.

“We’re at the front end of feeling it and a lot of the [baby] boomers – and older boomers – who waited to retire following the financial crisis [of 2008] are now going to retire pretty rapidly,” said Jeff Hood, director of corporate recruitment and employment at Citizens.

Indeed, financial managers (not limited to banking) in Rhode Island are among the top 50 occupations with the largest amount of projected openings in 2022 with 883, according to the DLT. The largest amount of financial managers – about 36 percent of a projected 3,399 – exist in finance and insurance and the DLT projects that 302 of these job openings will happen because of industry growth, while the remaining 581 will be needed as replacements.

“There are a lot of people in the next 10 to 15 years that will be hitting 65, filing for Social Security and riding off into the sunset,” said Bob Twomey, senior vice president of special projects, commercial banking, at Webster Bank.

Twomey is heading a new training program at Webster, slated to start this month. He’s focused specifically on bolstering talent within the bank’s up-and-coming commercial banking workforce, which he says collectively drums up about 50 percent of the bank’s revenue.

Webster’s pilot program has six employees, including two new hires. The bank plans to put employees through an intensive two-week course and if it’s successful, Twomey says the goal is to expand.

The Mass. bankers association has a professional-development program it runs each year for professionals already in the field and a paid summer internship program that places interested college students with banks in both Massachusetts and Rhode Island. But beyond the Mass. association and individual banks’ training programs, there isn’t much else in the way of local training for aspiring bankers.

“The talent pipeline has kind of dried up,” said Kristen L. DiSanto, executive vice president of human resources at Washington Trust Bancorp, parent of The Washington Trust Co.

The average employee age at Washington Trust is 47.5 years old, according to DiSanto, which is older than the national average of 41.2 years old.

Washington Trust, like most financial institutions in Rhode Island, doesn’t have a formal training program. New hires are usually brought in one at a time, DiSanto says, in part because there aren’t dedicated resources for training, but also because of lateral hiring that’s prevalent among competing financial institutions.

“If we do bring someone on in-house, they often get picked off by different banks,” DiSanto said.

Washington Trust and the R.I. Bankers Association have been in preliminary talks with the state about how they can try to grow young talent locally.

Edward “Ned” O. Handy III, president and chief operating officer of Washington Trust, says he’s talked with state political leaders about the issue. Botelho says an ideal scenario would include a partnership between financial institutions and the state’s higher educational institutions.

The University of Rhode Island this year announced the state’s first masters of science in finance program, scheduled to start in January.

Until some sort of plan comes to fruition, financial institutions like Washington Trust are likely to continue to hire from outside and grow talent from within, choosing from younger employees in the bank branches, according to DiSanto.

But fewer people are expected to staff those branches going forward, due to the advent of mobile and e-banking.

“We’re seeing a lot of traditional front-desk jobs being replaced by technology,” said Bingxuan Lin, URI professor of finance.

BRANCHING OUT

Handy called the future of branch banking the “million-dollar question.”

National studies show a trending decline in the amount of branch-first customers. Indeed, California-based research firm Javelin Strategy & Research, a Greenwich Association LLC company, found that nearly one in every four U.S. customers now prefers mobile banking more than branch banking when it comes to accessing primary checking accounts.

The study, released in June, shows that 23 percent of consumers prefer mobile banking, 17 percent favor branch banking and the largest portion – 39 percent – bank online. Popular services, such as remote-deposit capture, which allows customers to deposit checks using a smartphone, has the Federal Reserve of Boston suggesting that “mobile banking is now a ‘baseline’ standard service that financial institutions in the region must offer,” according to a 2014 survey.

Botelho says on average a teller 10-15 years ago would handle about 20 transactions per hour, but that amount today has fallen to about three transactions per hour.

Some local institutions, however, are in no rush to eliminate brick-and-mortar services. Washington Trust, for instance, is trying to use branch services to increase its presence statewide.

The bank is currently No. 3 in Rhode Island with 9.3 percent of the deposits, according to the FDIC, while Citizens and Bank of America, No. 1 and No. 2, respectively, have a combined 64.2 percent.

Handy says Washington Trust’s philosophy is that if it could gain just 1 percent more of that deposit market share it would justify the opening of a new branch.

But gaining enough market share to justify opening new branches is harder than it might seem.

Take TD Bank NA for instance.

The bank, a Toronto-Dominion Bank Group subsidiary, entered the Rhode Island market in 2010 with big aspirations. Then-Market President Robert A. Kolb told Providence Business News the goal was to build 20-25 branches over the next four-to-five years. Today, more than five years later, the bank has just seven offices and .93 percent of the Rhode Island market share, according to the FDIC.

Gary E. Furtado, president and CEO of Smithfield-based Navigant Credit Union, says being a physical part of the community is woven into the credit union approach.

“Credit unions have stepped forward in the community” since the recession emerged in 2008, Furtado said. “If you have a problem you can walk in and there are decision-makers in the building.”

Last year the number of U.S. bank branches fell to the lowest level since 2005, according to data recorded with the FDIC. The number of branches nationwide fell to 94,725 in 2014, representing a 4.8 percent decline from its peak in 2009.

But Rhode Island, along with Hawaii, Massachusetts, Montana and Wyoming, don’t appear to be following the trend.

In 2014, the FDIC recorded 261 bank branches between 22 FDIC-backed institutions in Rhode Island. That number has gone relatively unchanged – plus or minus a branches or two – since 2010 when there were 259 branches between 25 institutions.

But local financial institutions, like their counterparts nationally, are still looking for ways to have high-functioning branches that require less staff.

BayCoast Bank just opened a new branch in Dartmouth with a handful of different services dedicated to technology, including a “technology bar” where customers can come in and get guidance from staff about how to use online and mobile services.

The branch also has an interactive teller machine, or ITM, which acts like an automatic teller machine, but offers a live-video feed where customers in need of help can interact with bank staff who are at central offices in Swansea.

Ann Ramos Desrosiers, senior vice president and chief community bank officer at BayCoast, says the ITM allows the bank to extend hours of service during the week and improve the customer experience.

But it could also represent an opportunity for the bank to service more locations with less employees, as the technology would allow tellers to have a virtual presence at several different branches if more ITMs are installed.

The bank is increasing and capitalizing on technology, while trying to retain a human touch.

“We think personal service is important,” Desrosiers said. “Five or 10 years ago, tellers were purely about transactions. … Today, we’ve started this concept of a ‘universal banker’ where they can do everything.”

JOBS CHASING BEHAVIOR

What Rhode Island branches will look like in a decade or more isn’t clear, but the types of jobs that service them will most likely change.

“Clerical work behind the counter – those jobs will be replaced with a lot of technology,” Lin said. “But technology, I’m sure, will be creating new jobs, so I don’t see it as cutting loose the old jobs.”

There’s an increasing demand in the industry for IT maintenance, IT customer service and IT security, especially with the rise of security breaches throughout the world.

“It’s becoming a huge challenge out there with the amount of cybersecurity threats right now, so we’re all beefing up on IT and the data-service area,” said Karl A. Kozak, recently retired president and CEO of Pawtucket Credit Union.

Other jobs in banking, especially on the commercial lending and wealth-management side, are likely to have more longevity in the way they function, compared with retail banking.

Twomey says business owners entrusting the bank with professional wealth and individuals or families handing over personal wealth will still largely prefer the personal touch, more so than the convenience of technology.

And there are also certain aspects of credit analysis and the loan underwriting process that cannot be done by technology, Lin says, which is in part why Citizens and Webster are focusing their trainings in these areas.

“Part of it can be done automatically, but you need a lot of personal judgement and not all business loans are the same,” Lin said. “You still – right now – need a human being to make the sound human judgments.” •

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