The last forty-five years that I have been a banker have brought about so much change in the way business is conducted. There’s a real understatement on my part. However, let me focus on the area I know best; loan officer training. As a product of a formal bank training in the late 70’s I have seen the benefits of a dedicated training program to produce skilled commercial loan officers.
A bit of history. During the 1970’s and early 1980’s many national and regional banks ran internal training programs for loan officers. Every twelve, eighteen, or twenty-four months a new batch of freshly trained loan officers were sent out to gain experience and forge a career path. The supply was satisfying an ever growing need as business expansion was booming. Then, the recession of the mid 80’s came and as banks suffered the inevitable losses, expenses needed to be cut. Training programs were an easy item to cut and virtually every training program was eliminated.
As it does, the economy started to recover and so did the banking sector. Funny thing, the training programs did not return. Many banks found that the expense to be unnecessary. Many used the argument that we were just training loan officers for other banks and that made no sense.
What has transpired since the elimination of those formally structured loan officer training programs is what I see as a fundamental change in the business banking area. Fewer and fewer college graduates have found their way into the commercial loan officer ranks. Those who have, entered our industry have not been provided the quality of training they require and deserve. So, as the waves of “credit people” (and you will excuse the phrase) age out of the industry; the way credit is managed has changed.
Centralization and automation of credit analysis and the credit approval process has been the answer to the problem. This is quite evident in the large national banks. In addition, community banks have suffered the fallout. It has become increasingly more difficult to find commercial loan officers with the depth and breath of knowledge, training, and experience to staff branches. The “Great Recession” has shown a very bright light on the lack of experienced commercial loan officers. In addition, some in the banking industry point out that the age of specialization makes a generalist commercial loan officer training program archaic. I would suggest that community banking is in need of those generalist type commercial loan officers. Not all loan requests come from large National and Multi National companies, or highly specialized businesses requiring specific expertise.
The community banking segment is by it’s very nature a grassroots type of business. Without the ability to staff branches in communities across the country with adequately trained commercial loan officers, lending to businesses in those communities, both community banksand small businesses will likely fade away. A side note; without the organizational structure that supports community banking you also eliminate career development paths for those in community banking.
The crisis we face now with a lack of adequately trained commercial loan officers has its roots in the mid 80’s. The answer is simple, but not without incurring expense. The targeted training modules commercially available are not the coplete answer to the crisis. They may be the foundation on which to build. The answer lies in the commitment by the banking industry to dedicate resources, including the time to train and the cost associated with this extensive training program to address the problem.
