Skills gap blights transaction banking as industry’s allure jumps
The appeal of the transaction services industry for new talent has never been higher, as high-impact, pejoratively dubbed 'casino' investment banking job opportunities vanish. Technologic nous and an ability to navigate new client demands – amid market and regulatory shifts – are key skills that budding transaction bankers must develop to make their names in the industry.
Transaction banking was seen as the poor relation of more exciting careers in investment banking. All this changed during the financial crisis: with the reputation of “casino” bankers seriously damaged, the more vanilla route of transaction banking started to look more attractive.
|Rajesh Mehta, EMEA head of treasury
and trade solutions at Citi
However, despite a growing awareness of transaction banking as a career path, some believe there is a substantial talent shortfall in this area. “The corporate treasury function has evolved and grown in recent years, taking more importance in the corporate organization,” says Carole Berndt, head of global transaction services, EMEA at Bank of America Merrill Lynch (BAML). “This evolution has created increased demand for expertise and experience, and today this outstrips the available supply.”
She adds that while treasury roles are now attracting more graduates, “we do find ourselves caught between two generations – the very experienced treasurers with decades of experience – and they are rare and retiring – and a growing pool of young graduates, keen to take on this role. Between the two is a talent gap that corporates and banks are struggling to fill.”
As banks have consolidated their cash management and trade finance offerings into wider transaction banking units, professionals working in this area have had to broaden their knowledge and expertise. As Michael King, associate partner at financial services recruiter Magnus Walker & Partners, points out: “The transaction banker now has to be many things, to understand their clients’ demands.”
So what sort of candidates are transaction banks looking for? “As MNCs expand into emerging markets, they rely on their transaction banking partners to understand the complexities of the local environment,” says Mehta. “To that effect, we need to hire candidates who understand the full spectrum of transaction services and can help bridge the gap between our clients’ headquarters and their local offices across developed and emerging markets.
“The increased digitization of the banking space brings another challenge, as we want to attract technology-savvy candidates who can help our clients take advantage of the power of technology to improve mobility and efficiency.”
As the role of the transaction banker becomes more demanding, attracting and retaining the best transaction banking talent is becoming more of a competitive exercise.
“Specific areas such as trade finance are experiencing a lot of demand for candidates: this is an area where all banks are stepping up their activity and therefore competing for talent,” says Amy Burns-Thomson, head of international banking resourcing at RBS. “There are also specialist areas, such as supply chain finance and Sepa, where there is a shortage of experienced candidates available.”
What are banks doing to attract and retain the best transaction banking talent? Burns-Thomson says that as well as leveraging its reputation to attract candidates, RBS uses its own network to source talent. “The transaction banking industry is close knit, so there is a general awareness of talent,” she says. “In addition to this, we use LinkedIn for networking, advertise with financial services job boards and use specialist suppliers.”
Mehta says: “Citi offers specific development programmes, secondments and coaching to promote and retain the most high-calibre people. The breadth of our transaction services network in nearly 100 countries also allows us to promote internal mobility.”
Attracting suitable candidates is only part of the solution: equally important is encouraging the best professionals to stay with the bank for as long as possible. Where retention is concerned, Deutsche Bank says it actively promotes career mobility for existing talent. “Deutsche Bank has an impressive track record of employee progression within the bank as a result of our comprehensive, sustained people practices,” it states. “These have resulted in successful staff moves either from other divisions to GTB, or within GTB itself.”
While retention is harder in a competitive market, banks can increase their success in this area by working to improve job satisfaction and career prospects for transaction banking staff. “Improved career opportunities, responsibility for P&L and spotlight at the bank can all help a transaction banker become more of a master of their own destiny and therefore less likely to leave,” says King. However, there is an argument that the talent gap should not be viewed purely in terms of competition between banks. Another piece of the solution is the need to expand the pool of available talent by attracting more professionals into the pool of transaction banking talent.
According to Berndt, collaboration is needed across the industry to ensure that “the brightest men and women actively consider treasury as a career from the time they embark on internships and graduate”. Berndt adds that BAML is actively marketing its global transaction services business at a graduate level and says: “This is unique to our firm.”
As investment banking has lost its shine, transaction banking is gaining a reputation for being a more stable but still-challenging career option – and the talent shortfall means there are plenty of opportunities for promising candidates.