Jeff For Banks

The Golden Age of Banking? Depends on Us.

Jerry Reeves, President & CEO of Sturdy Savings Bank of Cape May Court House in New Jersey and current Chairman of the NJ Bankers Association, penned an article The Golden Age of Banking in the NJBA’s winter 2016 edition of New Jersey Banker magazine. He romanticized that more seasoned bankers might be reminiscing back to the “good old days”, but newer bankers might see today as banking’s golden age.
In that, I agree with Jerry. His optimism was palpable, citing the education levels of new bankers, technology innovations that can be implemented by large and small banks alike, and the stratification of seasoned and new bankers that can pave the way to future industry leadership.
His leadership transition comment brought to mind a comment by an industry FinTech professional, and my friend, Mark Zmarzly:

“We build moats in our industry… we need to build bridges.”

– Mark Zmarzly, CEO, Hip Pocket
How does Mark’s quote relate to the mix of seasoned and new professional bankers? Because there is tremendous friction in ushering in new leadership in our industry that weighs like a millstone around our collective necks that will likely lead to the continued shrinking of our ranks.
Some friction is sewed into our fabric and is largely out of our control. It relates to the regulatory scheme. A bank CEO recently told me that the CEO job at his bank could have only gone to an experienced bank CEO that came through the commercial lending ranks and his/her experience could not be with a troubled bank. Why the rigid criteria? Because regulators would approve no one else. Such attitudes bleed into the board room, as they create similar rigidity based on past bias or perceived regulatory preference. This ignores the fact that some of the most dynamic and forward looking bank leaders don’t fit that criteria.
In other words, it is extremely short sighted. But it is the safe choice, as boards seek similar leadership to what they got in the past in spite of the rapid changes occurring before us.
Although some barriers to future leadership are beyond our control, most are within it. Humans protect what we have. Teachers ensure that only those with teaching credentials can teach. Even though there may be willing retired government officials available to teach Civics class, they couldn’t break through the “teacher” barrier. Similarly, you can only practice law with a law degree. Three extra years of education and passing a bar exam. Abraham Lincoln practiced law with an elementary school education. We erect barriers to keep people out.
And so it goes in banking. What we need are development plans to turn our young bankers into future bank executives. Exposing them to multiple areas of the bank, formal training, and executive mentorship should be part of the transition. As executives near retirement, there should be multiple internal candidates to fill that role. 
Instead we turn to outsiders, or to the investment banker to help sell our bank. Successful banks of the future will purposefully hire, develop, and turn the keys over to their future leaders. Current leaders will have the resolve and humility to make it happen. Less than successful banks will call the investment banker and turn the keys over to someone else.
~ Jeff