Artificial intelligence is set to dramatically improve workers’ quality of life at banks across America – maybe even cutting the work week down to 3.5 days, said Jamie Dimon, chief executive of JPMorgan Chase, during an interview in October 2023.
“Your children are going to live to 100 and not have cancer because of technology,” Dimon says. “And literally they’ll probably be working 3.5 days a week.”
Dimon, like most bank executives, is bullish on the future of artificial intelligence and how it will improve antiquated banking systems. The bank has already started implementing AI in its research, trading, and customer service divisions. It’s a move that most executives see as necessary as more people than ever before choose to bank online.
But while it may be easy for megabanks like JPMorgan Chase to invest in AI, smaller community banks and credit unions face challenges. Mostly because they’re struggling to attract and retain tech talent.
Simply put: software and data engineers don’t want to work for them. Many graduates of the U.S.’s top engineering schools like Carnegie Mellon and Stanford take jobs at big tech companies — which offer high salaries and a host of perks.
The top three employers of Carnegie Mellon’s graduating students from 2019-2022, for example, were Google, Amazon and Facebook. But “big tech” isn’t always always a more stable career choice. About 261,997 workers in tech lost their jobs last year, according to a report from NerdWallet.
“Talent doesn’t see financial institutions as fast movers,” says Anna Kooi, national financial services practice leader at the consulting firm Wipfli. “Historically, the pace of change has not been anywhere near the pace of change on the technology side.”
It’s a crucial issue community banks will need to address as the pressure to innovate grows. Large financial institutions like Citi and Bank of America can offer cushy compensation packages to court top-tier software engineers and compete with the offerings of big tech companies. But community banks and credit unions that can’t provide the same offerings need a different edge.
“A lot of bankers are recognizing that for them to attract that talent, they need to restructure and change their whole way of doing work,” says Charles Potts, executive vice president and chief innovation officer of the Independent Community Bankers of America (ICBA), a trade group for small U.S. banks.
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Community Banks Aren’t Seen as Innovators
Consumers overwhelmingly prefer to bank online. 87% percent of respondents in a survey from Chase say they use their mobile banking app at least once per month or more. In many cases, younger generations may not go to the bank at all, Kooi says.
“The talent that financial institutions are looking for, many of them have never set foot in a bank before. They don’t even know how the back operations work,” she says. “That is a big barrier for financial institutions to attract that talent.”
“The talent that financial institutions are looking for, many of them have never set foot in a bank before.”
— Anna Kooi, Wipfli
This unfamiliarity may mean that younger job seekers don’t even consider community banks or credit unions as options for jobs, Kooi says.
There’s also a misconception that community banks and credit unions aren’t investing in new technology. They are, Kooi says, and at faster rates than in the past. About 43% of banking and investment firms say they are experimenting with AI and other new technologies, according to data from consulting firm Gartner. This was the third highest adoption rate of all industries surveyed.
“They’re moving faster than they ever have before but that’s not the perception of anyone outside of the industry,” Kooi says.
Offer Flexible Work and Better Benefits
Where community banks and credit unions can compete with Big Tech is with their benefits and office culture, Potts says. Recent graduates increasingly want flexibility and the option to work from home. They’re also looking for perks like unlimited time off, mental health support, and community service opportunities.
Younger employees want a company culture that aligns with their lifestyle and beliefs. Half of Gen Z cite a purpose driven employer as a “must-have” benefit, according to a survey from MetLife. Recent graduates are often asking themselves “does the organization have the same values and culture that is important to me?” Potts says. This is where community banks can really stand out.
“I think a lot of community banks are doing a great job of reflecting the values of the communities they serve,” he says.
Seek Partnerships with Engineering Programs
One way that community banks and credit unions can attract more tech talent is by partnering with local colleges and universities, Potts says. Developing a partnership with a software or data engineering program nearby can create a steady stream of talent into the bank.
“I tell bank executives all the time, go talk to the universities, go tell them what you need and they will work with you,” Potts says. “The universities’ greatest success is when they’re able to promote the hiring rates of their graduates.”
The Queensborough National Bank & Trust Company, a Georgia based community bank, for example, has a partnership with the Georgia Fintech Academy, a diversity talent development initiative between Georgia universities and the fintech industry.
“Go talk to the universities, go tell them what you need. The universities’ greatest success is when they’re able to promote the hiring rates of their graduates.”Wi
— Charles Potts, Independent Community Banks of America
The group offers projects, events, speakers, and classes to help prepare students for a career in the fintech industry. The partnership allows the bank to connect with local students and it regularly hires interns out of the program.
“I am looking for more skilled talent, more technological talent who can help us be more digital and help us be more technology savvy in what we are doing and how we handle things,” says Kim Kirk, COO of Queensborough National Bank & Trust Company, speaking on a podcast about the program.
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Leverage Your Current Talent
In the search for new talent it can be easy to forget about current employees. Don’t make that mistake, Kooi and Potts say. In many cases, the tech talent that you’re looking for may already be at the company.
Leaders at community banks should offer employees an opportunity to learn coding or other tech skills, Potts says.
“Offer a way for existing employees to continue to skill up,” Potts says. “Part of what a lot of bankers forget about is retention and growth of existing employees.”
Look for local innovation programs and encourage employees to pitch their ideas, Kooi says. The Independent Community Banks of America, for example, offers an accelerator program for early stage fintechs offering tools for community banks.
Banks can also leverage HR data and surveys to better understand where innovation is most needed within the bank and what skills employees want to learn right now, Kooi says.
“They have all of the information at their fingertips to be able to make some of these fast changes,” she says.
Lastly, give your workers the opportunity to become leaders of innovation. You might find that the ones who are the most enthusiastic aren’t who you’d expect, Kooi says. One of her clients had a 78-year-old on staff at a call center who turned out to be the biggest champion for a new technology.
Keep an open mind, Potts says. There are lots of creative ways you can encourage employee innovation. “If you’re going to take advantage of the technology and all that it can do for your bank, you’ve got to dip your toe in and get started.”
Caroline Hroncich is a freelance business journalist based in New York. She writes about workplace trends, HR, personal finance, banking, and more. Her work has appeared in MarketWatch, Business Insider, Employee Benefit News, the Society for Human Resource Management, and Cannabis Wire.