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As a global custody bank that manages close to $30 trillion of assets, State Street Corp. in Boston is constantly in need of fresh talent to handle back-office functions such as clearing transactions and reconciling accounts. Often its new hires are recent graduates of top universities, but the company also fills these important entry-level posts with young adults who've never attended college and grew up in some of Boston's roughest neighborhoods.
These workers come to State Street through Year Up, a Boston-based nonprofit that provides career training to at-risk young adults.
"It's opened up a whole, untapped pipeline of talent for us," Mike Scannell, State Street's senior vice president of global human resources, says of Year Up.
Overall about 10,000 men and women in 14 cities have gone through Year Up's one-year program since 2000, learning not just technical skills but also life skills, such as how to tie a tie, shake hands properly and write a business email. Thousands of Year Up grads are employed at some of the country's largest companies, including Microsoft, Facebook, Bank of America and JPMorgan Chase. State Street alone has hosted more than 700 Year Up students as interns, eventually hiring more than half of them.
The partnership with Year Up is as much a business initiative as a philanthropic one, according to executives at the participating companies.
Year Up students may not be college educated, but they have the capacity to learn and, due to their backgrounds, often possess a certain grit and resiliency that all employers value, Scannell says. State Street also has found that the Year Up hires tend to be more loyal than others, perhaps because they appreciate the company for taking a chance on them. More than 80% of the 70 Year Up graduates State Street hired between 2005 and 2010 are still with the company.
"These are individuals who are in our communities who have many of the raw skills that businesses need to be successful," Scannell says. "What Year Up does is provide very specific job training that will help these individuals succeed."
Year Up is the brainchild of Gerald Chertavian, an entrepreneur who wrote about the idea in an essay for his business school application in 1989. Eleven years later, after founding and then selling the London-based technology firm Conduit Communications, Chertavian established Year Up with a small staff and an annual budget of just $200,000. Today, Year Up has roughly 450 employees and a budget of about $86 million.
Chertavian says he got the idea while working at Chemical Bank in New York in the late 1980s and volunteering with the Big Brothers Big Sisters program. Even amid the crime, drugs and gang activity that plagued the city then, Chertavian saw in many street kids the drive and potential to make something of their lives if given the opportunity.
Apart from lifting young adults out of poverty, Year Up is helping companies across all industries address what he says is a widening "skills gap." Many struggle to fill entry-level technology positions, because they can't find people with the right skills or the starting salaries simply aren't enough for recent college graduates with $100,000 of student debt, Chertavian says. At the same time, there are roughly 6 million unemployed young adults in the country who, with the right training, could fill these jobs.
"These are knowledge-based jobs that provide a career path, but a lot of new college grads can't afford to take a job at $32,000 a year," says Chertavian, 49. "So we have this tremendous opportunity" to employ young people who have been looked at as "social liabilities rather than economic assets."
The first Year Up class, in 2001, had just 22 students, but class sizes have grown larger each year as more companies have committed to hiring the graduates. About 2,750 students completed the program last year, with most finding work at any one of Year Up's 250 partner companies. According to Chertavian, 85% of Year Up graduates find jobs paying at least $16 an hour within four months of graduating. "Many four-year colleges would love to have our results," he says.
The typical Year Up student is between 18 and 24 years old with little more than a high-school diploma or a GED. Most students are low income and 95% are minorities.
Chertavian says that roughly four in 10 of young adults who express interest in the program eventually apply and, of those four, generally two get accepted. Students spend the first six months in the classroom either at a Year Up facility or a partner community college learning both the technical and the soft skills. They spend the next six months interning at one of the partner companies.
The companies pay Year Up about $950 weekly throughout the yearlong program for each intern they take on. The fee covers the cost of the program for that student, including a stipend and any community college credits received as part of the training. (The students do not receive additional pay beyond the stipend.)
"It's not inexpensive," Chertavian acknowledges, "but it is less expensive than other forms of human capital. It's a cost-effective way to bring talent in the door."
One of the program's many success stories is Jason Coullette, a 2008 graduate of the program who now works as a compliance analyst at JPMorgan Chase.
Coullette was two years out of high school, taking college classes and working as a dietary aide at a hospital, when he heard about Year Up. Though he was making decent money, Coullette saw it as a dead-end job and jumped at the chance to enroll in Year Up. "A lot of friends I told about the change I was making thought I was crazy," says Coullette, who was born and raised in Queens. "They were like, 'You're making $18 an hour and you are going to give that up?'"
Coullette completed his classroom training in mid-2007 and landed an internship at Lehman Brothers in its risk management group. He so impressed his managers at Lehman that he was offered a full-time job in February 2008, making roughly $40,000 a year.
He went on to work at other Wall Street firms after Lehman's collapse and earned a Bachelor's degree in business management and economics by taking courses at night and on weekends. One of his Year Up connections helped him get into JPMorgan Chase in late 2013 and, after six months working in the credit risk department, he put in for a job in compliance and got it.
"I came from an environment where I was only expected to attain so much and aspire to do so much," says Coullette, 28. "Year Up gives you an opportunity that can change your life. I now own my own home and a car. I have a few dollars in the bank. And I have a set of skills that makes me very marketable."
Chertavian says that banks have been among Year Up's most reliable partners over the years.
Now Year Up is designing special curricula to fit individual banks' needs. It's teaming up with JPMorgan Chase, for example, to train interns in compliance operations. It also has trained students in asset servicing for State Street and technology for Bank of America.
"In the early days we were mostly focused on desktop support, but we have shifted to where we are now much more of a solutions provider," Chertavian says. "We are talking to companies and saying, 'Tell us where you have pain points in hiring and let us work with you to customize curriculum or training that better meets your needs for hiring middle-skill talent.'"
Cathy Bessant, the head of global technology and operations at Bank of America, says the Year Up talent supply is local and diverse. She also likes the opportunity to help young adults develop skills that they can parlay into careers.
BofA has hosted more than 150 interns since 2013, and many of them are now employed in Bessant's group as mainframe technicians, investment operations analysts and fraud analysts.
With demand for skilled labor only expected to increase, Year Up is planning a major expansion. By the end of 2021, it intends to be operating in 26 cities and offer training for as many as 10,000 young adults a year.
It recently set up shop in Jacksonville, Fla., where State Street, Bank of America, Ally Financial and several other financial firms have operations centers. Its goal is to train 300 young adults a year there in partnership with Florida State College of Jacksonville. Dallas also is being targeted as a future location because it is an important market for many of Year Up's corporate partners, Chertavian says.
"America needs skilled labor and a knowledge-based workforce if we are going to be competitive," he says. "Any company that says 'need not apply unless you have a four-year degree' is effectively locking out folks who can add real value."