Widening the talent pipeline

By Karen Epper Hoffman

U.S. banks are energetically seeking ways to diversify their ranks with people of color. Sometimes that takes shape in ways like lateral leadership hires, but banks large and small are also expanding their pipelines to welcome diverse talent.

Some banks have built strong partnerships with colleges and universities that tend to have more Black, Asian and indigenous students to encourage these young people to start their careers in banking. The core concept is that by reaching out to these students, banks can offer the kind of financial education and training that will boost the potential for the management track.

Plus, university-focused programs can also sway potentially skeptical Generation Zers to see how banking can indeed offer them the type of opportunities they might not be actively considering in the financial industry. If these professional outreach programs pay off, banks will have begun to fill their talent pipeline with a much more diverse group of employees, who are already entering the business with a sizable amount of knowledge and skills under their belts.

Take for example Texas Capital Bank, which last year launched an ABA Commercial Lending Certificate program for historically Black colleges and universities, or HBCUs. The program began in 2021 with the Dallas-headquartered bank partnering at first with Prairie View A&M University, whose campus is located about three hours away in Prairie View, Texas.

The program was enough of a success that the Texas bank announced in February 2022 it was expanding this certificate program, teaming up with Huston-Tillotson University, another prominent HBCU based in Austin. Effie Dennison, TCB’s head of community development and the executive who spearheaded this program, says that as an African-American woman in banking for the past three decades, she has had a front-row view to how “very under-represented people of color” have been in the industry—especially in the often higher-paying and faster-rising positions in departments outside basic retail services, like commercial lending.

The shape of partnership

From the beginning, the objectives of the program have been myriad: build a deeper bench of diverse employees with various roles at the bank; sow the seeds for a new crop of recent college graduates who would enter the financial industry with more practical skills that ultimately helps institutions like TCB hire for hard-to-fill roles (especially now, in the wake of the “Great Resignation”); and hopefully, dissuade today’s 20-somethings that banks are not a stodgy career backwater where people of color especially might assume little upward mobility.

The program will cover qualitative analysis and how to assess industry risk, market risk and management risk. It is designed to provide an understanding of the role of loan policy and the need to summarize the borrower’s various risks into an appropriate credit risk rating for lending approval. In addition, it provides guidance on loan structuring and documentation issues in response to the analysis of quantitative and qualitative risks which includes an overview of key documents, loan agreements, and covenants, as well as negotiating and pricing. Textbook costs required for the course are covered by Texas Capital Bank’s arrangement with ABA.

“This program was intended to open the eyes for young people of color, who might have believed they couldn’t play a big role in banking and financial services,” Dennison says. In addition, more diversity of race, ethnicity, sex and socio-economic background (especially in commercial lending) could provide a huge long-term payoff for TCB and other banks by giving the banks themselves a fuller, more workable picture of how to work with “under-resourced communities,” which Dennison characterizes as still a very “untapped market.”

“In commercial lending, it is hard to find people to put in those credit roles [and]we’re often hard-pressed to find employees who themselves come from these communities,” Dennison said. As an example, she pointed out that even federal bank regulators are often forced to draw former bank employees with underwriting and compliance experience out of retirement because they are already desperate to fill these critical but tricky jobs.

TCB is hardly alone in its efforts. JPMorgan Chase has invested in and partnered with several HBCUs with the intention of bringing more people of color into the business, boosting practical banking and lending knowledge, and increasingly offering internships and better work-based learning for these young people. In addition to investing millions of dollars in programs at HBCUs, including Johnson C. Smith University, Simmons College of Kentucky and Texas Southern University, the money center bank offers a wealth management-focused scholarship and mentorship program to encourage HBCU students to pursue careers as financial advisors.

The North Carolina Bankers Association recently launched a Future Bank Leaders program to enhance the bank talent pipeline through the state’s 12 HBCUs. Starting this fall with a pilot at Shaw University, Livingstone College and one or two other HBCUs, the program will provide the Risk Management Association’s “credit essentials” curriculum as an elective for students via a virtual classroom with digital textbooks, provided via scholarships from RMA and the NCBA Foundation.

“When they graduate in accounting or finance or business management from an HBCU in North Carolina it’ll be wrapped around an RMA certificate … and so they’ll be job-ready on day one to go to work as credit analysts and can train to be commercial bankers,” says NCBA President and CEO Peter Gwaltney. “It’s a way to create a talent pipeline for our member banks so that they can hire people who can go into minority-owned small businesses and do what they can to shrink the wealth gap in their communities with this talent pool.”

The holistic program will also include internships and, significantly, mentorships with Black North Carolina bankers. Gwaltney points out “how important it is for HBCU graduates to know what they’re getting themselves into a majority-white workplace.”

A long-term commitment

The relationship between TCB and Huston-Tillotson University existed even before the bank came calling with its commercial lending certificate program, according to Rohan Thompson, dean of HTU’s School of Business and Technology, where the student population is currently 64 percent Black and 23 percent Hispanic. “We were already teaching some of the material required for the certification,” says Thompson. “And when TCB brought the idea to us, it was a no-brainer to add the additional class to meet the requirements.”

In addition to undergraduate four-year degrees in business, education, the humanities, natural sciences, social sciences, science, and technology, HTU already had offered an MBA in general business administration. In tandem with the bank, the Austin-based college has already graduated its first group of students with their commercial lending certificates.

At HTU, the lending course is taught by Derrick Bonyuet and “designed to cover topics relevant for a comprehensive overview and understanding of the commercial lending landscape,” Thompson says. Local TCB executives conduct guest lectures for students to “provide real-world examples of the commercial lending process,” he adds. The program also offers mentoring to students and faculty in the program and covers most costs. Students who pass the semester automatically receive the ABA Commercial Lending Certificate.

“The students in the first cohort had nothing but positive things to say about the experience,” Thompson said. “The long-term goal is to place more minorities in the banking industry, where there are many opportunities.”

Karen Epper Hoffman is a frequent contributor to the ABA Banking Journal.