Frost Bank bumps up against familiar challenge: A dearth of tech talent
Cullen/Frost Bankers in San Antonio has been steadily hiring retail bankers as part of its Houston expansion, but it’s having a harder time filling technology roles closer to its headquarters.
The $31.8 billion-asset parent of Frost Bank still needs about 50 additional staff to fill out its information technology and cybersecurity functions, Chairman CEO Phil Green said Thursday. Rather than pledging to cut expenses, Green stressed the importance of filling those roles.
“If I could wave a magic wand, I would, and bring them in,” he said during the company’s quarterly earnings call. “It's just tough to find talent and you don't want to let your technical debt grow too high.”
In a follow-up call with American Banker, Green attributed some of the difficulty to a general shortage of labor. With unemployment as low as it is, most industries are having difficulty finding talent, whether it’s in banking or health care or construction, he said.
He added that San Antonio, where most of Frost’s tech employees work, just doesn’t have the same concentration of tech workers that Austin, a tech hub about 80 miles north, does.
Frost has been sourcing applicants in a variety of ways, such as using digital recruiting sites, working with recruiting firms, and encouraging employees to refer family and friends.
And though Green said he is optimistic that the bank can fill the jobs eventually, recruiters say it won’t be easy. While banks are generally open to recruiting candidates from outside financial services, tech workers aren’t always eager to work in an industry that’s so heavily regulated and perceived as being slow to innovate, said Craig Stephenson, managing director of Korn Ferry’s North America technology officers practice.
“There is an assumption, which is not always right, that organizations might be moving more slowly based on the regulatory environment,” he said.
Banks’ needs are also changing, said Chris Davis, co-head of Russell Reynolds Associates’ fintech practice. Banks used to look for employees with more traditional IT experience, but now they’re looking for people skilled in emerging technologies, like artificial intelligence and cloud computing.
“That very, very up-to-the-minute type of emerging-technology experience and skill set is in high demand and short supply,” he said.
Though Frost is struggling to attract tech talent, Green said it is “ahead of the curve” on hiring for its continuing expansion in the Houston market.
He said the bank has already hired over 100 people to work in the 25 new locations it’s planning to open there between now and 2020. So far, it has opened three of those locations, but the pace of openings should accelerate through the rest of the year.
The recent hiring spree is among the reasons why noninterest expenses grew 7.6% in the second quarter from a year earlier, to $203.2 million. Salaries and wages rose 6.5% to $90.8 million, and employee benefits rose 12% to $20.1 million, as the company added new employees and awarded normal annual merit increases.
Second-quarter net income totaled $109.6 million, essentially flat with the year-earlier quarter. Earnings per share of $1.72 met the mean estimate of analysts surveyed by FactSet Research Systems.
Net interest income rose 6.6% to $277.8 million, and the net interest margin widened 21 basis points to 3.85%. Average loans grew 6.6% to $14.4 billion, with broad-based growth across all lending categories.