When Eric Conner joined Univest Corp. as its chief technology officer, he immediately noticed a problem.

The IT veterans who ran the $2.2 billion asset bank's technology operations — each with 30 years of experience or more — were nearing retirement. All eight would be gone by the end of 2015.

Finding other people with the same skills would not resolve the issue for long, because they, too, would be close to retirement. "These are people that knew what I'll call the older school languages like COBOL and RPG and things like that," Conner says.

"In some ways, it really is a lesson in succession planning, but it's not an easy one, because technology changes and the kids graduating college today aren't studying the same things that these people studied." Conner says. "You have that gap that you have to bridge somewhere."

Univest's predicament is an example of what banks everywhere are facing, and it's not confined to IT departments. There is a shortage of highly skilled talent to replace an overload of retiring Baby Boomers.

"We have a missing generation in banking," says Rod Taylor, founding partner of the management consulting firm Taylor & Co. in Atlanta. "This is becoming increasingly critical by the day."

The causes span decades, starting as far back as the financial crisis of the early 1980s. "Banks cut costs, eliminated training, stopped hiring people," Taylor says.

By the 1990s, "very few people who came into the industry got trained across multiple functions, and those who did left for a dot-com or the energy sector," he says.

Compounding that challenge is what Taylor characterizes as a pervasive obsolescence plaguing small and midsized banks in particular — "obsolescence in their antiquated paradigms, the obsolescence of old technology, the obsolescence of branches that are no longer profitable."

All of this is creating a need for an emphasis on succession planning, of the kind that goes far beyond finding the next CEO. These days especially, succession planning can and should be an opportunity for serious soul-searching on where a bank is headed, what it needs to do differently to thrive, and who the best people are to help. "In effect, you're conducting a strategy project, because you're taking a look at what your organizational strengths and weaknesses are from the wheelhouse down," Taylor says.

He is helping three banks find chief financial officers, and in each case, the banks are seeking a level of experience and skill that play to a particular strategy, such as being able to lead an initial public offering, a merger or a divestiture.

Another area hurt by the Baby Boomer retirement wave is, ironically, the IRA department, which Kevin Boyles, vice president of business development for the retirement services provider Ascensus, describes as "the redheaded stepchild" at many community banks.

Because IRAs are not moneymakers, "most banks really wish they didn't even have to offer them," Boyles says, "but they often do because the customers want them."

Community banks with up to $500 million in assets generally have one individual overseeing their IRA program, he says. And those individuals are often in their late 50s to early 60s and have been handling the program for as long as anybody can remember.

The conventional approach would be to hire someone new.

But as with Univest's IT staff, "these people have built up significant knowledge over a fair number of years in those roles, and, in our estimation, they really are not replaceable," Boyles says.

One option is changing the role to suit a younger generation of bank employees. Rather than a long-term career, the job of IRA department manager could become similar to other branch roles, where workers rotate in for a few years and then get promoted, Boyles says.

"As a general rule, those people are not going to stay in a role for 20 years like Sam and Sandy Baby Boomer, so they'll never accumulate knowledge they need to be proficient," Boyles says. "So the bank needs to have a strategy for how to deal with that, whether that's just changing how that person gets training and support, or potentially looking at outsourcing the program."

Ascensus, too, anticipates it will have to adjust, perhaps enhancing its hotline support as the retirements hit, since the newbies likely will need more frequent clarifications about retirement products on behalf of their customers.

Boyles says most banks are aware that they need to think about succession plans to fill the considerable void ahead, whether in IT, retirement services or the C-suite. But he doesn't think they realize that the brain drain is already happening, or that it is an issue a few new hires can't solve.

"Because of that generational paradigm shift, they can't just plug and play somebody new into that role," Boyles says. "They're going to always be playing catch-up and they're going to end up with potential exposures from a compliance perspective, because they'll never be able to replace the knowledge they have sitting in the chair right now."

The opportunity, though, is to go beyond traditional human resources tactics and seek ways to improve the operation through larger initiatives tied to succession planning.

In the case of Univest, figuring out what to do about its retiring IT veterans prompted an evaluation of its entire tech strategy. Rather than continue relying on internal staff to maintain antiquated hardware and software, the bank chose to outsource its processing with Jack Henry & Associates, a technology vendor that was running some of its systems already.

"A lot of the newer tools, like data reporting tools, that's something this previous staff did not have experience in, so we sort of have this gap," Univest's Conner says. "We were going to lose all of this experience and knowledge and information at one time and then bringing in people that, say, knew the newer tools, but didn't know the bank data and bank operations as well."

Going the outsourcing route not only solved the staff issue, it also improved the quality of operations, enabling the bank to upgrade its disaster recovery program, for example, Conner says.

For its part, Jack Henry says the decision to outsource processing is on the rise for a variety of reasons, with 25 of its bank customers doing so within the past year. That compares to the same number to outsource the previous four years combined.

Timothy Chrisman, CEO of the executive search firm Chrisman & Co. in Los Angeles, says the industry's talent gap is exacerbated because fintech companies are scooping up bankers and the financial crisis shrunk the pool of highly experienced executives.

He says, in the past, banks often worked on succession planning from a "disaster recovery" point of view, a way to answer the question, "What happens 'if?'" But now more are using it to explore new directions related to what they want to achieve.

In that vein, one aspect of succession planning Chrisman says banks would do well to enhance is identifying promising young individuals and devising a plan to expose them to training for bigger roles. "That's where it gets kind of fun, dealing with the preparation for something," he says.

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