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Banking

Nature of the Industry  |  Working Conditions  |  Employment  |  Occupations in the Industry
Training and Advancement  |  Job Outlook  |  Earnings

Significant Points

• Office and administrative support workers constitute almost 2 out of 3 jobs; tellers account for nearly 1 out of 4 jobs.
• Banking employment is projected to decline as mergers and automation make banks more efficient.
• Employment of tellers will decrease, while growth is expected for customer service representatives and for securities and financial services sales representatives.
• Job openings for tellers arising from replacement needs should be plentiful because turnover is high and the occupation is large.

Nature of the Industry

Banks safeguard money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s checks. With the passage of the Financial Modernization Act in 1999, banks also may offer investment and insurance products, which they were once prohibited from selling. Although other “nonbank” financial companies increasingly provide many of the same depository and payment services, a major difference between banks and other financial institutions is that deposits in banks are insured by the Federal Deposit Insurance Corporation. This ensures that depositors will get their money back, up to a stated limit, if a bank should fail. 

There are several types of banks, also called depository institutions, which differ in the number of services they provide and the clientele they serve. Commercial banks, which dominate this industry, offer a full range of services for individuals, businesses, and governments. These banks come in a wide range of sizes, from large global banks to regional and community banks. Global banks are involved in international lending and foreign currency trading, in addition to the more typical banking services. Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multistate area that provide banking services to individuals. Community banks are based locally and offer more personal attention, which many individuals and small businesses prefer. In recent years, online banks—which provide all services entirely over the Internet—have entered the market. 

Savings banks and savings and loan associations, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community-based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals. 

Credit unions are another kind of depository institution. Most credit unions are formed by people with a common bond, such as those who work for the same company or belong to the same labor union or church. Members pool their savings and, when they need money, they may borrow from the credit union, often at a lower interest rate than that demanded by other financial institutions. 

Federal Reserve banks are Government agencies that perform many financial services for the Government. Their chief responsibilities are to regulate the banking industry and to control the Nation’s money supply—the total quantity of money in the country, including cash and bank deposits. Federal Reserve banks also perform a variety of services for other banks. For example, they make emergency loans to banks that are short of cash and clear checks that are drawn and paid out by different banks. 

Interest on loans is the principal source of revenue for most banks, making their various lending departments critical to their success. The commercial lending department loans money to companies to start or expand a business or to purchase inventory and capital equipment. The consumer lending department handles student loans, credit cards, and loans for home improvements, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to purchase real estate. 

The money to lend comes primarily from deposits in checking and savings accounts, certificates of deposit, money market accounts, and other deposit accounts that consumers and businesses set up with the bank. These deposits often earn interest for the owner, and accounts that offer checking provide an easy method for making payments safely without using cash. 

The bank’s trust department performs a number of other services. For example, it may act as executor and administrator of a will, assembling and distributing assets to the beneficiaries. It also may serve as guardian of assets for minors or incompetent people. One of the department’s most important functions is to manage assets entrusted to it, such as a pension or endowment fund, and to distribute the proceeds. Some trust departments also act as stock transfer agents for corporations. As agents, they record the transfer of ownership of stock. They also distribute dividend checks, annual reports, and other mailings to stockholders. 

Technology is having a major impact on the banking industry. For example, many routine bank services that once required a teller, such as making a withdrawal or deposit, are now available through ATMs that allow people to access their accounts 24 hours a day. Also, direct deposit allows companies and governments to electronically transfer payments into various accounts. Further, debit cards and “smart cards” instantaneously deduct money from an account when the card is swiped across a machine at a store’s cash register. Electronic banking by phone or computer allows customers to pay bills and transfer money from one account to another. Finally, the availability and growing use of credit scoring software allows loans to be approved in minutes—rather than days—making lending departments more efficient. 

Other fundamental changes are occurring in the industry as banks diversify their services to become more competitive. Many banks now offer their customers financial planning and asset management services, as well as brokerage and insurance services, often through a subsidiary or third party. Others are beginning to provide investment banking services that help companies and governments raise money through the issuance of stocks and bonds, also usually through a subsidiary. As banks respond to deregulation and as competition in this sector grows, the nature of the banking industry will continue to undergo significant change. 

Working Conditions

The average workweek for nonsupervisory workers in banking was 35.6 hours in 2000. Supervisory and managerial employees, however, usually work substantially longer hours. Eleven percent of employees in 2000, mostly tellers, worked part-time. 

Working conditions also vary according to where the employee works. Employees in a typical branch work weekdays, some evenings if the bank is open late, and Saturday mornings. Hours may be longer for workers in bank branches located in grocery stores and shopping malls, which are open most evenings and weekends. Branch office jobs, particularly teller positions, require continual communication with customers, repetitive tasks, and a high level of attention to security. Tellers also must stand for long periods in a confined space. 

To improve customer service and provide greater access to bank personnel, banks are establishing centralized phone centers, staffed mainly by customer service representatives. Employees of phone centers spend most of their time answering phone calls from customers and must be available to work evening and weekend shifts. 

Administrative support employees may work in large processing facilities, in the banks’ headquarters, or in other administrative offices. Most support staff work a standard 40-hour week; some may work overtime. Those support staff located in the processing facilities may work evening shifts. 

Commercial and mortgage loan officers often work out of the office, visiting clients, checking out loan applications, and soliciting new business. Loan officers may be required to travel if a client is out of town, or to work evenings if that is the only time at which a client can meet. Financial service sales representatives also may visit clients in the evenings and on weekends to go over the client’s financial needs. 

The remaining employees located primarily at the headquarters or other administrative offices usually work in comfortable surroundings and put in a standard workweek. In general, banks are relatively safe places to work. In 1999, cases of work-related injury and illness averaged 1.5 per 100 full-time workers, among the lowest in the private sector, where the rate was 6.3. 

Employment

In 1997, nearly 95 percent of establishments in banking employed fewer than 50 workers (see chart). However, these small establishments, mostly bank branch offices, employed only half of all employees. The other half worked in establishments with 50 or more workers. Banks are found everywhere in the United States, but most bank employees work in heavily populated States such as New York, California, Illinois, Pennsylvania, and Texas. 

Occupations in the Industry

Office and administrative support occupations account for about 2 out of 3 jobs in the banking industry (table 2). Bank tellers , the largest individual banking occupation, provide routine financial services to the public. They handle customers’ deposits and withdrawals, change money, sell money orders and travelers checks, and accept payment for loans and utility bills. Increasingly, tellers also are selling bank services to customers. New accounts clerks and customer service representatives answer questions from customers, and help them open and close accounts and fill out forms to apply for banking services. They are knowledgeable about a broad array of bank services and must be able to sell those services to potential clients. 

Loan and credit clerks assemble and prepare paperwork, process applications, and complete the documentation after a loan or line of credit has been approved. They also verify applications for completeness. Bill and account collectors attempt to collect payments on overdue loans. Many general office clerks and bookkeeping, accounting, and auditing clerks are employed to maintain financial records, enter data, and process the thousands of deposit slips, checks, and other documents that banks handle daily. Banks also employ many secretaries, data entry keyers , receptionists, and other administrative support workers. First-line supervisors/managers of office and administrative support workers oversee the activities and training of workers in the various administrative support occupations. 

Management, business, and financial occupations account for about 23 percent of employment in the banking industry. Financial managers direct bank branches and departments, resolve customers’ problems, ensure that standards of service are maintained, and administer the institutions’ operations and investments. Loan officers evaluate loan applications, determine an applicant’s ability to pay back a loan, and recommend approval of loans. They usually specialize in commercial, consumer, or mortgage lending. When loans become delinquent, loan officers, or loan counselors, may advise borrowers on the management of their finances or take action to collect outstanding amounts. Loan officers also play a major role in bringing in new business and spend much of their time developing relationships with potential customers. Trust officers manage a variety of assets that were placed in trust with the bank for other people or organizations; these assets can include pension funds, school endowments, or a company’s profit-sharing plan. Sometimes, trust officers act as executors of estates upon a person’s death. They also may work as accountants, lawyers, and investment managers. 

Securities, commodities, and financial services sales agents , who make up the majority of sales positions in banks, sell complex banking services. They contact potential customers to explain their services and to ascertain the customer’s banking and other financial needs. They also may discuss services such as deposit accounts, lines of credit, sales or inventory financing, certificates of deposit, cash management, or investment services. These sales agents also solicit businesses to participate in consumer credit card programs. At most small and medium-size banks, however, branch managers and commercial loan officers are responsible for marketing the bank’s financial services. 

Other occupations used widely by banks to maintain financial records and ensure the bank’s compliance with Federal and State regulations are accountants and auditors , and lawyers. In addition, computer engineers and specialists are needed to maintain and upgrade the bank’s computer systems and to implement the bank’s entry into the world of electronic banking and paperless transactions. 

Training & Advancement

Bank tellers and other clerks usually need only a high school education. Most banks seek people who have good basic math and communication skills, enjoy public contact, and feel comfortable handling large amounts of money. Through a combination of formal classroom instruction and on-the-job training under the guidance of an experienced worker, tellers learn the procedures, rules, and regulations that govern their jobs. Banks encourage upward mobility by providing access to higher education and other sources of additional training. 

Tellers, clerks, and mid-level banking personnel can increase their job skills and enhance their knowledge by taking courses accredited by the American Institute of Banking (AIB), an educational affiliate of the American Bankers Association, and by the Institute of Financial Education (IFE), an affiliate of the Bank Administration Institute. These organizations have several hundred chapters in cities across the country and numerous study groups in small communities. Most banks use the facilities of these organizations, which assist local banks in conducting cooperative training programs or developing independent programs. Some community colleges also offer courses for employed tellers and those seeking to become tellers. Taking these courses can give applicants an advantage over other jobseekers. 

Some banks have their own training programs, which result in teller certification. Experienced tellers qualify for certification by taking required courses and passing examinations. Experienced tellers and clerks may advance to head teller, new accounts clerk, or customer service representative. Outstanding tellers who have had some college or specialized training offered by the banking industry are sometimes promoted to managerial positions. 

Workers in management, business, and financial occupations usually have at least a college degree. A bachelor’s degree in business administration or a liberal arts degree with business administration courses is suitable preparation, as is a bachelor’s degree in any field followed by a Master of Business Administration (MBA) degree. Many financial management positions are filled by promoting experienced, technically skilled professional personnel—for example, accountants, auditors, budget analysts, credit analysts, or financial analysts—or accounting or related department supervisors in large banks. 

Financial services sales agents usually need a college degree; a major or courses in finance, accounting, economics, marketing, or related fields serve as excellent preparation. Experience in sales also is very helpful. These workers learn on the job under the supervision of bank officers. Sales agents selling securities need to be licensed by the National Association of Securities Dealers. 

Advancement to higher level executive, administrative, managerial, and professional positions may be accelerated by special study. Banks often provide opportunities for workers to broaden their knowledge and skills, and they encourage employees to take classes offered by the AIB and IFE, as well as courses at local colleges and universities. In addition, financial management and banking associations, often in cooperation with colleges and universities, sponsor numerous national or local training programs. Each of their schools deals with a different phase of financial management and banking, such as accounting management, budget management, corporate cash management, financial analysis, international banking, and data processing systems procedures and management. Employers also sponsor seminars and conferences, and provide textbooks and other educational materials. Many employers pay all or part of the costs for those who successfully complete courses. 

In recent years, the banking field has been revolutionized by technological improvements in computer and data processing equipment. Learning how to apply these improvements is a vital upgrade to managerial skills that enhances advancement opportunities. 

Job Outlook

Wage and salary employment in banking is projected to decline 2 percent between 2000 and 2010, compared with the 16-percent growth projected for the economy as a whole. The combined effects of technology, deregulation, mergers, and population growth will continue to affect total employment growth and the mix of occupations in the banking industry. Overall declines in office and administrative support occupations will be offset by growth in professional, managerial, and sales occupations. Although a decline in employment is expected, job opportunities should be plentiful, particularly among tellers and other administrative support staff, who make up a large proportion of bank employees and often transfer to other occupations or leave the labor force. 

Bank mergers contributed significantly to employment declines throughout the 1990s. Merger activity—at a slower pace—is expected to continue over the projection period, dampening employment growth. At the same time, many banks will open more branch offices in areas in which the population is growing. However, because of widespread automation of many banking services, fewer employees will be hired to staff new branches than in the past. 

Advances in technology should continue to have the most significant effect on employment in the banking industry. Demand for computer specialists will grow as more banks make their services available electronically and eliminate much of the paperwork involved in many banking transactions. On the other hand, these changes in technology will reduce the need for several office and administrative support occupations. Employment of tellers will decline as customers increasingly use ATMs, direct deposit, debit cards, and electronic banking to perform routine transactions. Other technological improvements, such as digital imaging and computer networking, will adversely affect employment of the “back-office” clerical workers who process checks and other bank statements. Employment of customer service representatives, however, is expected to increase as banks hire more of these workers to staff phone centers and sell banking products to branch customers. 

Recent deregulation of the banking industry now allows banks to offer a variety of financial and insurance products that they were once prohibited from selling. The need to develop, analyze, and sell these new services will spur demand for securities and financial services sales representatives, financial analysts, and personal financial advisors. Demand for “personal bankers” and trust officers to manage the assets of and advise wealthy clients, as well as the aging baby-boom generation, also will grow. However, banks will face continued competition—particularly in lending—from nonbank establishments, such as consumer credit companies and mortgage brokers. Companies and individuals now are able to obtain loans and credit and raise money through a variety of means other than bank loans. Therefore, employment of loan officers will grow only slowly, as financial services sales representatives, who sell loans along with other bank services, take their place.  

Earnings

Earnings in the banking industry vary significantly by occupation. Earnings in the largest occupations in banking appear in table 3.
 

Table 3. Median hourly earnings of the largest occupations in banking, 2000
Occupation	Depository institutions	All industries
Computer software engineers, systems software	$31.51	$33.43
General and operations managers	30.36	29.41
Financial managers	26.23	32.22
Financial analysts	22.85	25.20
Loan officers	19.55	19.92
Credit analysts	18.23	19.32
Securities, commodities, and financial services sales agents	17.62	26.96
Customer service representatives	11.33	11.83
New accounts clerks	11.05	11.10
Tellers	9.21	9.21

 
In general, greater responsibilities result in a higher salary. Experience, length of service, and, especially, the location and size of the bank also are important. In addition to typical benefits, equity sharing and performance-based pay increasingly are part of compensation packages for some bank employees. As in other industries, part-time workers do not enjoy the same benefits that full-time workers do.

Very few workers in the banking industry are unionized—only 1.3 percent are union members or are covered by union contracts, compared with 14.9 percent of workers throughout private industry.

Source: Career Guide to Industries, Bureau of Labor Statistics

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