Why is traditional banking not as popular with college graduates as it once was?
In line with this week's series on how bankers' lives have changed, let me look back on what a banking career involved several decades ago.
At community banks, power generally was concentrated in the hands of the CEO (who was generally chosen on the basis of patrimony or matrimony - that is, he either inherited the job from his father or married the boss' daughter).
Large banks had a similar culture. Major decisions were made by the CEO, and bankers had to toe the line just to enter senior management.
In his book "Wriston," Phillip Zweig tells of the Citibank officer who was not promoted for years because his superior nursed a resentment that he had come to work one day wearing a dirty shirt.
What kind of people would become bank officers in such an environment? Basically, men who were socially acceptable, knew the right people, and wouldn't rock the boat.
These were largely the men who had gotten gentleman's C's in college but knew the right way to act, with friends and strangers.
The right college helped, and each bank had a college culture it favored. Thus we had "Princeton banks," "Yale banks," and the like. At some banks, every CEO for 50 to 70 years running had gone to the same college.
It goes without saying that members of minority groups were not even considered for top posts. ("Minorities" definitely included women. For more than 30 years, the American Bankers Association's Stonier Banking School was 100% male.)
Did this approach make sense? Absolutely, considering the nature of the business.
Banking was a simple game. If you made a loan, that loan would earn you a return for 10 to 20 years; there was little work involved in monitoring or servicing it. And if you had the right contacts and a knowledge of the ways of the world, you would be the one who wrote that loan in the first place.
It was the proverbial "3-6-3" world - take in deposits at 3%, lend them at 6%, and be on the golf course by 3 p.m. Observers would often say, "You can wind up a bank Jan. 1 and it will run by itself to Dec. 31."
Why is banking different now? And why are the attitudes of college students toward the industry different?
I do not need to tell American Banker readers again how competition, diversification, technological change, customer demands, and complex new government rules are demanding more talent and drive from bankers.
But students have changed, too.
Sure, we still have some who settle for gentleman's C's and just want to live on their contacts and knowledge of the socially correct way to do things. But those skills aren't enough to bring in the business.
What do top students want today? They want empowerment and top-dollar salary.
There was always empowerment in banking, with its important role in every community. But few aside from the CEO could make the decisions that would help the local gas station add a second bay, help the widow put her child through college, or open the vault on a Sunday to a good customer needing traveler's checks for an emergency trip.
In many students' eyes, banking retains the reputation, valid or not, that a few make the decisions and the rest just carry out orders. And this is highly negative for young people eager to make an impact.
Financial reward is also a key to banking's negative image with students. Investment banking, asset-based lending, mortgage banking, and other competitors of commercial banks have the reputation of rewarding solid achievement immediately. Banks are still looked upon as places where you wait your turn for the big bucks to be spread around to you.
So banking has a real selling job to do if it is to attract its share of the best and the brightest.
Mr. Nadler is a contributing editor of the American Banker and professor of finance at Rutgers University Graduate School of Management.
