Bitcoin to $100,000.
The number of banking institutions drops below 4,000.
Travillian places the first AI robot as a bank CEO.
East West Bank merges with South State Bank and Northern Trust to become East West North South Bank.
Will any of these statements be true this year? (My bet is one of them will be accurate.) But these humorous statements are designed to provoke and excite you into reading my wild prognostications for the year ahead. I’ll opt for the more pragmatic path and look back at 2023’s talent trends within the bank space to understand how the events of yesteryear can better prepare us for what’s to come this year.
Retirements abound; stay ahead of your succession planning.
Most recent data indicates that the average age of a bank CEO is 62 — five years ago that number was 57. Further, the average age of a community bank board member is 68. It doesn’t take a rocket scientist to infer that a lot of these people will be retiring over the next three-five years, especially considering the fatigue (and nausea) that has set in from riding the more recent, volatile economic cycle. Succession planning is a must, and it’s never too late to start. At your organization, just start by examining your organizational chart, identifying critical positions. Link these to your overall strategy, and begin tracking internal and external succession targets. Running assessments on emerging personnel and external finalists is also a great idea.
Deposit generation talent and strategy is necessary.
Right now, banks are struggling to keep up with their customers’ rate desires, and it’s wreaking havoc on their balance sheet. Here are three ideas that can help:
Make sure retail, commercial, and deposit generation are in lockstep. Seems like obvious advice, but I’ve been surprised at how many of our bank clients are leaving opportunities on the table. Make sure incentive plans reward lenders for bringing in low-cost core deposits and conversely, your branch staff are detecting commercial opportunities as well. Lenders are creatures of habit (and territorial) but branch or treasury management staff must be positioned as relationship management allies who will take exceptional care of their clients. This united front will help win new cross-sell opportunities on both sides of the house. Over the past few years, banks of a certain size have created a chief banking officer or chief deposit officer role to oversee this internal marriage, and we believe this trend will continue.
Consider new alternatives for deposit generation. For funding, there’s only so many ways to skin a cat, but new, tech-forward strategies around embedded banking and payments are bona fide — albeit highly volatile — ways to attract low-cost deposits (and fee revenue). With this example, you’ve got to be ready to spend money (mostly on tech, talent and risk infrastructure) to bring in money.
Increase your balance sheet management. You can easily engage an external advisor, but we recommend bringing on a new skillset to your talent bench. Which brings us to…
Realize that the CFO seat is changing.
Thirty-five percent of our searches this year were for CFOs. It’s clear that, out of all the executives in a bank, the last two years have proven that this seat needs the most upgrading. Historically, CFOs hail from an accounting background and excel at telling the story of what happened rather than anticipating what will happen. While accounting experience will always be important, we’ve seen a few of our bank clients put an onus on strategic finance, corporate development, treasury and of course, balance sheet and liquidity management. Banks of a certain size will need to make sure they don’t take the same missteps as the banks that failed in March 2023.
It’s still a candidate market BUT…
2023 yielded just shy of 100 full bank M&A deals. That’s a paltry amount compared to previous years and the collateral damage of this for banks is not having bountiful amounts of displaced talent to pick up. But, as most industry analysts predict, we are standing on the precipice of an M&A boom. If you’re looking to hire, 2025 may be the year where you’ll have the pick of the litter. However, if you’re a job seeker, 2024 is your year, before the consolidation wave comes.
If you’re searching for talent, don’t be idle. Be aggressive.
Even though I anticipate talent availability will pick up if you stay patient, the best banks in the country never take their foot off the gas when it comes to recruiting. Down markets are the best time to bolster your storytelling and steal A-listers away from more stagnant peers. If their current employer has turned the proverbial faucet off, great talent may want to jump ship to a place where the water is still flowing.
Best wishes to the entire banking community in 2024!
Brian Love is head of banking & fintech at Travillian, an executive search and talent advisory firm for the financial services industry.