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The banking industry is facing a crisis in the coming years.
We promise this isn’t like the 10,001 articles you’ve already read about how banks are being “Uber-ized” by tech startups. We're talking about an entirely different problem.
This problem is largely self-inflicted, given the cancellation of most in-house training programs, but it also should be solvable if we tackle it the right way.
The big crisis? Banks are short on new talent. They are especially lacking lending talent, and the shortfall is about to get much larger as the boomer generation retires with few qualified replacements in sight. Consider this sobering finding from Bank Director’s 2016 Compensation Survey:
“Forty percent of survey respondents say that recruiting commercial lenders is a top challenge for 2016. When asked to describe their bank’s efforts to attract and retain commercial lenders, 43 percent say there aren’t enough talented commercial lenders. The same number say they’re willing to pay highly to fill these valuable roles within their organization.”
Every bank we’ve ever worked with has a huge variance in the level of lender production. The distribution typically looks like a power law curve, where the majority of production comes from a few big producers (which we call “Alpha Lenders”), while most of the headcount and cost comes from the average and laggard lenders.
This is true of sales production in most industries, but it is especially important in banks. All of those deals live on the balance sheet, and their makeup dictates the bank’s profitability and risk profile for years to come. Given that dynamic, the top lenders in a bank have a massive impact on the institution’s performance.
To get a sense of this, we must first take a detour and tell the story behind the “Zipf Curve.“
This is an excerpt from the book, "Earn It"