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Diversity is key for future of local banking

Biz Journal 3-6-2015

Written by Jeff Blumenthal
Reporter- Philadelphia Business Journal

 

 

 

Biz Journal 3-5-2015

 

 

 

 

 

 

 

 Alan Kaplan asked an intriguing question to panelists at the Future of Local Banking event. Photo by Francis Hilario

 

Last week, I moderated a panel of six local bank CEOs or regional presidents at the Philadelphia Business Journal’s “Future of Local Banking” event, which included about 130 audience members — almost all of whom are connected to the industry in some fashion.

Our panel, diverse in terms of the size and geography of the institutions they represent, answered questions regarding finding innovative ways to offset earnings pressure related to net interest margin compression, the heightened and broader competition for lending, cyber security, the direction of branching and the burdens of increased regulatory compliance requirements.

But perhaps the most intriguing question came from an audience member, Alan Kaplan, CEO of Kaplan Partners, a Wynnewood-based executive search firm focused on the financial services sector. Kaplan asked what banks were doing to develop talent because the pool of applicants for banking jobs is getting smaller.

As Kaplan was speaking, I peered around the room and saw just one person of color (who I later discovered was an IT vendor looking to make banking connections). So I added a diversity focus to Kaplan’s question. Out of 110 local banks, there are just four women and one person of color (United Bank of Philadelphia CEO Evelyn Smalls counts as both) who are a CEO or regional president of a local bank.

Back when Philadelphia’s biggest banks were all based in Center City and not Charlotte, N.C.; Pittsburgh, Rhode Island, San Francisco or Toronto, they had large training programs that produced the next generation of lenders and executives. But those programs died out a generation ago, leaving a less formal entry into the profession.

The responses from our panelists did not break much new ground. They said they were committed to growing their own talent and have placed an emphasis on diversity. Kaplan told me later that he thinks local bankers are sensitive to the need for improving diversity numbers and having a deeper overall talent pool entering the profession.

One senior lender told me afterwards that the fact that most of the panelists said their banks did not have formal training programs was “interesting and maybe somewhat concerning” because “since the beginning of time, banking has been and will always be a people business.”

A bank CEO told me that the diversity issue was “frustrating.” Even though his bank is more diverse than it ever has been, the further you go up the organization’s hierarchy, the less diverse it seems to be.

“I attribute that to higher-level executives being 20-plus year industry veterans and banking 20-plus years ago was even less diverse than today,” the banker said on condition of anonymity. “We have about 10 individuals today with 10 years’ experience and, hopefully — if they stay in banking — they will be future executive leaders. I cannot tell you how hard it was to find a senior executive female — though after six months, I finally did.”

This is an issue that bankers will have to figure out sooner rather than later. As society becomes more diverse every year, banks will want employees at all levels who reflect that change.