Banks safeguard money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s checks. Banks also may offer investment and insurance products, which they were once prohibited from selling. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role—accepting deposits and lending funds from these deposits.
Goods and services. Banking is comprised of two parts: Monetary Authorities—Central Bank, and Credit Intermediation and Related Activities. The former includes the bank establishments of the U.S. Federal Reserve System that manage the Nation’s money supply and international reserves, hold reserve deposits of other domestic banks and the central banks of other countries, and issue the currency we use. The establishments in the credit intermediation and related services industry provide banking services to the general public. They securely save the money of depositors, provide checking services, and lend the funds raised from depositors to consumers and businesses for mortgages, investment loans, and lines of credit.
Industry organization. There are several types of banks, which differ in the number of services they provide and the clientele they serve. Although some of the differences between these types of banks have lessened as they have begun to expand the range of products and services they offer, there are still key distinguishing traits. 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 multi-state area that provide banking services to individuals. Banks have become more oriented toward marketing and sales. As a result, employees need to know about all types of products and services offered by banks. 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, with some success. However, many traditional banks have also expanded to offer online banking, and some formerly Internet-only banks are opting to open branches.
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 help implement our Nation’s monetary policy so our economy can run more efficiently by controlling the Nation’s money supply—the total quantity of money in the country, including cash and bank deposits. For example, during slower periods of economic activity, the Federal Reserve may purchase government securities from commercial banks, giving them more money to lend, thus expanding the economy. Federal Reserve banks also perform a variety of services for other banks. For example, they may 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 their 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 banks 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 their owners, and accounts that offer checking provide owners with an easy method for making payments safely without using cash. Deposits in many banks are insured by the Federal Deposit Insurance Corporation, which guarantees that depositors will get their money back, up to a stated limit, if a bank should fail.
Recent developments. Technology is having a major impact on the banking industry. Direct deposit allows companies and governments to electronically transfer payments into various accounts. Debit cards, which may also be used as ATM 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 access information such as account balances and statement history, pay bills, and transfer money from one account to another. Some banks also have begun offering online account aggregation, which makes available in one place detailed and up-to date information on a customer’s accounts held at various institutions.
Advancements in technology have also led to improvements in the ways in which banks process information. The use of check imaging allows banks to store photographed checks on the computer instead of paper files. Also, the availability and growing use of credit scoring software allows lending departments to approve loans in minutes, rather than days.
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—usually through a subsidiary—that help companies and governments raise money through the issuance of stocks and bonds. 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 ConditionsHours. The average workweek for nonsupervisory workers in depository credit intermediation was 35.7 hours in 2006. Supervisory and managerial employees, however, usually work substantially longer hours. About 1 out of 10 employees in 2006, mostly tellers, worked part-time.
Employees in a typical branch work weekdays, some evenings if the bank is open late, and Saturday mornings. However, banks are increasingly expanding the hours that their branches are open and opening branches in nontraditional locations. For example, hours may be longer for workers in bank branches located in grocery stores and shopping malls, which are open most evenings and weekends. 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.
Work environment. Branch office jobs, particularly teller positions, require continual communication with customers, repetitive tasks, and a high level of attention to security. Tellers also work for long periods in a confined space.
Commercial and mortgage loan officers often work out of the office, visiting clients, checking loan applications, and soliciting new business. Loan officers may travel to meet out-of-town clients, or 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 2006, the rate of work-related injury and illness per 100 full-time workers was 1.1 in central banks (monetary authorities) and 2.7 in other banking establishments (depository credit intermediation), both lower than the overall rate of 4.4 per 100 employees in the private sector.
EmploymentThe banking industry employed about 1.8 million wage and salary workers in 2006. About 7 out of 10 jobs were in commercial banks; the remainder were concentrated in savings institutions and credit unions (table 1).
| Industry segment | Employment | Establishments |
|---|---|---|
| ||
Total | 100.0 | 100.0 |
| ||
Monetary authorities - central bank | 1.2 | 0.3 |
| ||
Depository credit intermediation | 98.8 | 99.7 |
Commercial banking | 72.5 | 69.7 |
Savings institutions | 13.1 | 14.7 |
Credit unions | 12.1 | 14.2 |
Other depository credit intermediation | 1.2 | 1.1 |
In 2006, about 84 percent of establishments in banking employed fewer than 20 workers (chart 1). However, these small establishments, mostly bank branch offices, employed 36 percent of all employees. About 64 percent of the jobs were in establishments with 20 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
Banks employ various types of financial and customer service occupations. Tellers make up the largest number of workers, and overall office and administrative support occupations make up the largest portion of jobs in the industry. Management, business, and financial occupations also employ a significant number of employees in the banking industry.
Office and administrative support occupations. These occupations account for 2 out of 3 jobs in the banking industry (table 2). Bank tellers, the largest number of workers in banking, provide routine financial services to the public. They handle customers’ deposits and withdrawals, change money, sell money orders and traveler’s 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. Some customer service representatives work in a call or customer contact center environment, taking phone calls and answering emails from customers. In addition to responding to inquiries, these workers also help customers over the phone with routine banking transactions, and handle and resolve problems or complaints.
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 and information processing workers, receptionists, and other office and administrative support workers. Office and administrative support worker supervisors and managers oversee the activities and training of workers in the various administrative support occupations.
Management, business, and financial occupations. These occupations account for about 25 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 repay 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. This has become a more important task in recent years.
Other occupations. 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 specialists maintain and upgrade the bank’s computer systems and implement the bank’s entry into the world of electronic banking and paperless transactions.
| Occupation | Employment, 2006 | Percent change, 2006-16 | |
|---|---|---|---|
| Number | Percent | ||
All occupations | 1,825 | 100.0 | 4.0 |
Management, business, and financial occupations | 449 | 24.6 | 5.4 |
General and operations managers | 34 | 1.8 | -8.4 |
Marketing and sales managers | 11 | 0.6 | 1.9 |
Financial managers | 73 | 4.0 | 1.9 |
Human resources, training, and labor relations specialists | 15 | 0.8 | 5.3 |
Management analysts | 8 | 0.5 | 1.4 |
Accountants and auditors | 27 | 1.5 | 1.7 |
Credit analysts | 15 | 0.8 | -8.3 |
Financial analysts | 18 | 1.0 | 11.4 |
Personal financial advisors | 24 | 1.3 | 22.3 |
Loan officers | 133 | 7.3 | 12.1 |
Professional and related occupations | 72 | 4.0 | 6.9 |
Computer specialists | 56 | 3.0 | 8.8 |
Sales and related occupations | 82 | 4.5 | 11.8 |
Securities, commodities, and financial services sales agents | 50 | 2.7 | 17.2 |
Office and administrative support occupations | 1,202 | 65.9 | 2.9 |
First-line supervisors/managers of office and administrative support workers | 111 | 6.1 | -5.2 |
Bookkeeping, accounting, and auditing clerks | 63 | 3.5 | 1.7 |
Tellers | 546 | 29.9 | 12.1 |
Brokerage clerks | 9 | 0.5 | -1.0 |
Customer service representatives | 106 | 5.8 | 12.0 |
New accounts clerks | 73 | 4.0 | -18.4 |
Receptionists and information clerks | 9 | 0.5 | 1.5 |
Couriers and messengers | 6 | 0.3 | -8.3 |
Executive secretaries and administrative assistants | 36 | 2.0 | 1.9 |
Secretaries, except legal, medical, and executive | 15 | 0.8 | -9.6 |
Data entry keyers | 8 | 0.5 | -18.6 |
Office clerks, general | 40 | 2.2 | 0.2 |
Office machine operators, except computer | 12 | 0.6 | -14.9 |
| Note: Columns may not add to totals due to omission of occupations with small employment | |||
Training and Advancement
A high school education is usually all that is needed for most office and administrative occupations, while management, business and financial occupations usually employ workers with at least a college degree. Good communication and customer service skills are necessary for all occupations in the banking industry.
Office and administrative support occupations. 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 are offering more products and spending more on reaching out to their customers. As a result, they will need more creative and talented people to compete in the market place. Banks encourage upward mobility by providing access to higher education and other sources of additional training.
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 are sometimes promoted to managerial positions.
Management, business, and financial occupations. 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’s degree in business administration (MBA). Many 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.
There are currently no specific licensing requirements for loan counselors and officers working in banks or credit unions. Training and licensing requirements for loan counselors and officers who work in mortgage banks or brokerages vary by State, depending on whether they are employed by a mortgage bank or mortgage brokerage.
Various banking-related associations and private schools offer courses and programs for students interested in lending, as well as for experienced loan officers who want to keep their skills current. Completion of these courses and programs generally enhances the individual’s employment and advancement opportunities. The Banking Administration Institute offers the Loan Review Certificate program for persons who review and approve loans. The Mortgage Bankers Association (MBA) offers the Certified Mortgage Banker (CMB) program. A candidate who earns the CMB exhibits a deep understanding of the mortgage business. To obtain the CMB, one must have at least 3 years of experience, earn educational credits, and pass an exam.
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, and agents selling insurance also must obtain an appropriate license.
Advancement to higher level executive, administrative, managerial, and professional positions may be accelerated by taking additional training. Banks often provide opportunities and encourage employees to take classes offered by banking and financial management affiliated organizations or other educational institutions. Classes often deal with one of the different phases 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 advancements in computer and data processing equipment. Learning how to apply this technology can greatly improve one’s skills and advancement opportunities in the banking industry.
OutlookThe number of local branches and offices in the United States has been steadily increasing, and this trend is expected to continue to result in moderate growth in employment in banking.
Employment change. Wage and salary employment in banking is projected to increase by about 4 percent between 2006 and 2016, compared with the 11 percent growth projected for wage and salary employment across all industries. Growth will result from banks refocusing on the local branch as a critical means of servicing customers, because branch location is often the most important factor for customers in selecting a bank. New branches also will be appearing more frequently in nontraditional locations, such as inside local grocery stores or shopping malls. Growth will likely be greatest in areas where the population is growing.
The combined effects of deregulation, technology, demographic changes, and mergers will continue to affect total employment growth and the mix of occupations in the banking industry. Deregulation of the banking industry 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” to advise and manage the assets of wealthy clients, as well as the aging baby-boom generation, also will grow. However, banks will continue to face considerable 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, some loan officers may be replaced by financial services sales representatives, who sell loans along with other bank services.
Advances in technology should continue to have a 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 some office and administrative support occupations. Employment growth among tellers will be limited as customers increasingly use ATMs, direct deposit, debit cards, and telephone and Internet banking to perform routine transactions. The number of electronic payments has increased and checks now account for less than half of consumers’ monthly bill payments. In addition, technological improvements, such as digital imaging and computer networking, are likely to lead to a decrease or change in the nature of 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 respond to e-mails.
The increasing number of retired baby boomers should have a beneficial effect on total employment in the banking industry. They are more likely than younger age groups to hold bank deposits and visit branches to do their banking. Many also may need help in retirement planning and investing wealth inherited from their parents and so may seek the services of the various financial professionals in banking, such as financial managers, and securities, commodities, and financial services sales agents.
In the past, consolidation within the banking industry contributed significantly to employment declines, but the effect of mergers on employment within the industry is expected to be minimal in the years ahead. Merger activity has slowed recently, and a balance is beginning to develop between the numbers of new banks established and existing banks lost due to mergers and acquisitions.
Job prospects. Job opportunities should be favorable for tellers and other administrative support workers because they make up a large proportion of bank employees and many individuals leave these positions for other jobs that offer higher pay or greater responsibilities. The need for skilled workers will create good job opportunities for individuals with up-to-date computer skills and financial services backgrounds.
EarningsIndustry earnings. Earnings of nonsupervisory bank employees involved in depository credit intermediation averaged $535 a week in 2006, compared with $738 for all workers in finance and insurance industries, and $568 for workers throughout the private sector. Relatively low pay in the banking industry reflects the high proportion of low-paying administrative support jobs.
Greater responsibilities generally result in a higher salary. Experience, length of service, and, especially, the location and size of the bank also are important. Earnings in the banking industry also vary significantly by occupation. Earnings in the largest occupations in banking appear in table 3.
| Occupation | Depository credit intermediation | All industries |
|---|---|---|
General and operations managers | $40.89 | $40.97 |
Financial managers | 34.89 | 43.74 |
Loan officers | 23.51 | 24.89 |
First-line supervisors/managers of office and administrative support workers | 19.66 | 20.92 |
Executive secretaries and administrative assistants | 18.05 | 17.90 |
Loan interviewers and clerks | 14.35 | 14.89 |
Customer service representatives | 13.68 | 13.62 |
New accounts clerks | 13.60 | 13.65 |
Office clerks, general | 11.82 | 11.40 |
Tellers | 10.63 | 10.64 |
Benefits and union membership. In addition to common benefits offered by many industries, equity sharing and performance-based pay increasingly are part of compensation packages for some bank employees. As banks encourage employees to become more sales-oriented, incentives are increasingly tied to meeting sales goals, and some workers may even receive commissions for sales or referrals. 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 2 percent are union members or are covered by union contracts, compared with 13 percent of workers throughout private industry.
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