Careers in Banking
Banking is one of the most popular segments in terms of making the career where for starting the career in the banking, one is required to get the required graduation degree from the reputed university, after which the person has to start working in any of the different areas such as Tellers, Loan Officers, Investment Officers, auditor etc.
As given by Research and Markets, the global banking industry is expected to reach US$163,058 billion in 2017 with a CAGR of 8% over the next five years. Though the banking industry has slowed down a bit due to the debt crisis that challenged several major economies, it still has a long way to go in terms of fetching ample profitability. The factor that majorly led to sustained profitability is the dichotomy in the growth of developed and emerging markets. The banking industry of the emerging markets showed promise even during the worst crisis that jolted the whole world, taking the whole banking industry in its ambit. The banks in the developed markets, however, were worst hit by the debt crisis and sustained huge losses. Even in the current scenario, it is expected that the driving force behind the global banking industry would be the emerging markets. The growth of assets of the top 1000 banks has slowed down to 2.7% in the post-crisis period of 2008-2010, whereas, during the pre-crisis period of 2006-2007, the banks clocked double-digit growth.
Current Scenario in the Banking Industry
The global banking industry is dominated by Europe, which holds 43% of the total market share of the banking industry worldwide, but in terms of growth during 2006-2011, the Asia-Pacific banking industry outgrew both the European as well as the North American regions.
Primarily countries like India and China, with a massive population and rising per capita incomeCapita IncomeThe per capita income formula depicts the average income of a region computed by dividing the total income of that area by the total population of the region. It is used to figure out the average income of a city, provision, state, country, etc., offer immense opportunities for careers in the banking sector to flourish in these regions. Rising household incomes and consumer savings with investment in the banking sector will pave the way for a higher growth trajectory in the times to come since they provide ample opportunities for global banks compared to the U.S and Europe, which are anticipated to register sluggish growth.
Due to the debt crisis of 2008, the industry has been more careful with its regulations, in particular, pertaining to capital adequacy ratioCapital Adequacy RatioThe capital adequacy ratio measures the bank's financial ability to pay off its obligations. The capital-to-risk weighted assets ratio (CRAR) is evaluated as the percentage of the bank's capital to its risk-weighted assets. Bank's capital is the aggregate of tier 1 and tier 2 capital. and risk management. The laws are more stringent now to safeguard the interest of the customers as well as the banks so that such an inconceivable catastrophe doesn’t hurt the growth prospects of the careers in the Banking Sector.
The debt crisis jolted the banking industry to its core with shaken customer confidence; hence improving operational efficiency has become the need of the hour. Banks globally are investing huge sums in upgrading their technology platforms so as to provide a seamless banking experience to their clients along with stricter norms to regain and retain customer loyalty.
Worldwide banks are focussing on the following aspects of banking, which can be clearly seen as the upcoming trends in the global banking scenario.
Emerging Markets Focus
Emerging markets of Asia-Pacific, namely India and China, have an enormous middle-class base that has the disposable incomeDisposable IncomeDisposable income is an important mechanism to measure household incomes, and includes all sorts of income such as wages and salaries, retirement income, investment gains. In other words, it is the amount of money left after paying off all the direct taxes. to be invested. Banks globally are making their presence felt in the emerging markets, which serve as growth hubs for global banks.
A study estimates that by 2030 many emerging markets that are on the growth trajectory would have reached their full potential and would turn into mature markets. The current mature markets would be replaced by these burgeoning hubs of banking industry progression.
In Asia, Africa, and Latin America, the global banks will have to carefully tweak their services as well as regulations depending upon the local needs and requirements. The developed markets are technically advanced, whereas in these emerging markets, the banking penetration is still low, and with the introduction of smartphones, banks have a lot of opportunities in terms of a higher level of penetration through mobile banking platforms.
Many Asian banks are investing huge sums of money to take advantage of the growing smartphone user in these countries. In fact, in South Asia alone, mobile banking transactions have already crossed a billion in a year; in fact, in the year 2013, emerging markets contributed 60% to mobile payment transactions.
Customer Relationship the key to good banking
Customer relationships took the maximum hit in the global debt crisis. Hence it is imperative that banks have become extra cautious and vigilant when it comes to retaining their customers. With stricter norms and monitoring, banks globally are aiming at more personal and fulfilling customer relationships with greater trust and loyalty.
Customers now want more transparency in their banking relationships with a lot more control over their financial informationFinancial InformationFinancial Information refers to the summarized data of monetary transactions that is helpful to investors in understanding company’s profitability, their assets, and growth prospects. Financial Data about individuals like past Months Bank Statement, Tax return receipts helps banks to understand customer’s credit quality, repayment capacity etc.; it is estimated that to keep up with the current trend in the future as well the banks will have to deepen their customer relationships not only via having a deeper share in their wallet but also by strengthening personal connections through information derived from data analysis techniques.
Moreover, it is also estimated that by 2030, the demographics of the banking population would have completely changed. Banks will have to innovate newer business models to encompass the needs and requirements of the more urbane and elderly demographics.
Next Generation Banking Solutions
Over the decade, there has been a rapid increase in the rise of young consumers that are comfortable with using internet services and mobile applications, which makes it essential for banks to invest in remote banking solutions. Switching over to technology platforms reduces the operational, infrastructural, maintenance and energy costs for the banks hence increasing their profitability along with providing enhanced customer experience and personalized services, which promise greater reliability, enhanced security, improved flexibility, and functionality. In the times to come, such remote banking solutions will be a must-have function provided by each and every bank rather than being good to have features.
Business intelligence in transaction monitoring
An increase in the role of Business Intelligence (BI) and analytics in transaction monitoring is the need of the hour. With shrinking profit marginsProfit MarginsProfit Margin is a metric that the management, financial analysts, & investors use to measure the profitability of a business relative to its sales. It is determined as the ratio of Generated Profit Amount to the Generated Revenue Amount. and infinite competition, banks have realized that to gain a competitive edge amongst their contemporaries, they have to analyze the already available consumer data, which is at their disposal. Every customer, when makes a transaction, whether it is purchase or investment related, is recorded in the banks’ systems. Such data can be appropriately analyzed to derive useful information about customer preferences, thus providing need-based and apt solutions to the customers is its investment product or mortgage-related. It is also the key component of consumerization by helping in the development of products and solutions pertaining to specific consumer needs.
Not only does BI provide real-time analysis that can be used immediately, but it also unifies the information spread across various IT systems. BI is also useful in the prevention of fraud by establishing a pattern of activity for a customer, any deviation from which can be easily traced.
Establishment of payment hubs
Technological advancement has been responsible for the birth of non-bank Payment Service Providers (PSPs) mushrooming at an alarming rate, offering mobile banking services. Hence it becomes imperative for banks to establish their own payment hubs, which not help them in generating revenues and reducing costs but also streamline their payment systems spread across multiple channels.
Customers nowadays demand anytime anywhere payments, which are cheaper as well as quicker without compromising on their financial security, which has been a major concern post the crisis. Payments form a major percentage of a bank’s revenue; hence even banks find it easier to manage payments through an enterprise-level rather than managing through multiple payment engines. It results in being more manageable and efficient for the banks, alongside providing them with better business opportunities and enhancing the customer experience accompanied by risk reduction for the end consumer.
The banking industry is segmented into retail, corporate, and investment banking, along with asset and wealth management. In all these, retail banking is expected to outshine owing to the most essential and basic set of banking services it provides to the clients. Let’s understand the career prospects available in the retail banking space.
Job Profiles in Retail Banking
Tellers are generally entry-level positions in a bank. They are the ones in direct contact with the customers tending to their requirements, be it cash deposit, cashing checks, or handling customer queries and service-related issues. Teller jobs offer career progression in the form of the head teller, which is a supervisory role and requires training of the team and coaching them for operational transactions. You can also be promoted as the Branch Manager of the branch if you show promise. Tellers also play a major role in risk management by controlling any likely frauds. An average annual paycheck of a teller amounts to $28487.
2. Loan Officers
Loan Officers play a key role in the banks’ growth since loans generate revenue for the banks. Junior loan officers can originate automobile loans and unsecured products like credit cards. For originating home loans as well as business loans, the loan officer has to get himself registered with the National Mortgage Licensing System and pass a background check. Loan officers are salaried and are responsible for opening transactional accounts as well, like checking and savings account. Most banks also employ mortgage lenders who are commission-based. According to the Bureau of Labor Statistics, an average loan officer earns an annual pay of $48,561.
3. Investment Officers
Investment officers are not directly employed by the banks. They are the representatives or licensed brokers in the banks who sell mutual fundsMutual FundsA mutual fund is an investment fund that investors professionally manage by pooling money from multiple investors to initiate investment in securities individually held to provide greater diversification, long term gains and lower level of risks., stocks, and other securities and are generally employed by a division of the holding corporation that owns the bank. They are paid remuneration in the form of commissions, whereas the bank employees receive pay for customer referrals. Most banks also want their employees to pass a series of federal licensing exams and become a licensed employees, thus earning a salary as well as commissions for securities sales. Most banks prefer business or finance majors for such roles who earn an average annual salary of $88,000, according to Payscale.
4. Insurance Representatives
Insurance representatives, like their investment counterparts, are not directly employed by the banks but by the holding corporation owned by the bank. They make commissions on life insurance, annuities, and health insurance policies, whereas the bank officer earns pay through customer referrals. Oft times, to attain the branch goals for selling annuities, the banks want their staff to obtain the license, bypassing a state licensing exam, and contribute towards annuities sales. Commissions for insurance representatives are not capped, which translates into unlimited earning potential, but the Payscale that an average annual of $35,696 is earned by the insurance representatives.
Auditors are responsible for reducing operational losses faced by a bank; hence in-house auditors are hired by the banks to keep a check on clerical errors and frauds. These auditorsThese AuditorsAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country's local operating laws. are generally experienced tellers who know the operational nitty-gritty of the bank and can detect fraudulent activity by monitoring bank operations. High-level auditors are Certified Public Accountant(CPAs) who have a college degree in accounting and finance and audit whole banking divisions. CPAs are also appointed by state and federal agencies to work as bank inspectors and keep a check on a bank’s activities and also have the power to declare banks insolvent. According to Payscale, the average annual salary of an in-house auditor is $57,709.
So if you are a graduate in accounting, mathematics, or even PR, a career in banking can be your ultimate choice for a lot of reasons, which include job security and flexibility, to having a global career, or even for the volume of money you can earn with a career in banking.
A bank will always be in business because it serves the basic financial and economic requirement of any country; moreover, like any other organization, it has a lot of departments from law, taxation, audit, retail et al., hence it is believed that a switch within the same organization which has a vast array of professionals is comparatively easier.
Another pertinent motivation to opt for a career in banking is the money it offers to its employees, along with financial security. With an experience of a couple of years, a hardworking employee can not only rake the moolah but can also have international opportunities considering how globally international the industry is.