BANKING

Nature of the Industry

Banks safeguard money and provide loans, credit, and payment services such as checking accounts, debit cards, and cashier's checks. Banks also may offer investment and insurance products. 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 roleaccepting deposits and lending money.

Goods and services. Banking comprises two parts: Monetary Authorities Central Bank, and Depository
Credit Intermediation. The U.S. Federal Reserve System is the central bank of the United States and manages the Nation's money supply and international reserves, holds reserve deposits of other domestic banks and the central banks of other countries, and issues the dollars we use. The credit intermediation and related services industry provides banking services to consumers and businesses. It secures the money of depositors, provides checking and debit card services, and lends money to consumers and businesses through credit cards, mortgages, car loans, investment loans, and lines of credit.

Industry organization. There are three basic types of banks: commercial banks, savings and loan
associations, and credit unions. Although some of the differences between these types of banks have lessened, there are key distinctions. Commercial banks, which dominate this industry, offer a full range of services for individuals, businesses, and governments. Commercial banks come in a wide range of sizes, from large global banks to mid-size regional and small community banks. In addition to typical banking services, global banks lend internationally and trade foreign currencies. Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multi-state area and provide banking services to individuals and local businesses. Community banks are based locally and have fewer branches than regional or global banks. In recent years, online banks which provide financial services entirely over the Internethave entered the market, with some success. However, even in Internet banking distinctions have lessened as traditional banks also offer online banking, and some formerly Internet-only banks have opened 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 consumers. Over time, distinctions between savings banks and commercial banks have largely disappeared.

Credit unions are another kind of depository institution. Credit unions are formed by people with a
common bond, such as those who work for the same company, belong to the same labor union, or live in the same county. Only people who have the common bond are allowed to become members. Loans and savings accounts are restricted to members. Credit unions are nonprofit organizations that are governed by a board elected by the depositors (members).

Federal Reserve banks are Federal Government agencies that perform many financial services. Their chief
responsibilities are to regulate the banking industry and to create and implement the Nation's monetary policy by controlling the money supplythe total quantity of dollars in the country, including cash and

bank deposits. The Federal Reserve uses monetary policy to promote economic growth while limiting inflation. During periods of slower economic activity, the Federal Reserve may increase the money supply by purchasing government securities and other assets. The Federal Reserve also promotes economic growth by lowering the interest rate it charges banks for loans. Increasing the money supply and lowering the interest rate charged to banks that borrow money gives banks more money to lend and, hopefully, grows the economy. The Federal Reserve may attempt to fight inflation by selling its government securities or raising the interest rate it charges banks, thus reducing the amount of money banks can lend. Federal Reserve banks also perform a variety of services for other banks, including processing 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; the consumer lending department handles student loans, credit cards, personal loans, and car loans; and the mortgage lending department loans money to individuals and businesses to purchase real estate. The money banks lend comes primarily from consumer and business deposits in checking, money market, and savings accounts and certificates of deposit. These deposits often earn interest for their owners, and provide owners with payment methods, such as online bill payments, checks, and wire transfers. Deposits in many banks are insured and regulated by a US Government agency, the Federal Deposit Insurance Corporation (FDIC), which guarantees that depositors will get their money back, up to a stated limit, if a bank should fail. Deposits in savings and loan associations and credit unions are insured and regulated by other US government agencies.

Recent developments. Declining home prices were one cause of the recent financial crisis. As home
values declined, many borrowers stopped paying (defaulted) on their home loans (mortgages.) With prices of houses declining and increasing rates of default, banks suffered large losses. Some banks suffered larger losses than other banks because they made riskier mortgage loans or owned mortgages concentrated in areas of the country with the largest housing price declines. Many banks with large losses were bought by other, stronger banks, or were taken over by the FDIC. The financial crisis accelerated an ongoing fundamental change in the banking industry as banks diversify their services to become more competitive. The financial crisis has allowed stronger banks to buy other banks and companies that provide other financial services at lower prices than before the crisis. Some other financial services that many banks offer their customers include: financial planning and asset management services, brokerage services, and insurance services. Banks purchase companies that offer these services and still offer them through a subsidiary or a third party. The financial crisis also helped commercial banks increase their share of the investment banking industry. Investment banks help companies and governments raise money through the issuance of stocks and bonds. As banks respond to regulatory changes and other changes driven by the financial crisis, the nature of the banking industry will continue to undergo significant change.

Working ConditionsAbout this section

Hours. The average workweek for nonsupervisory workers in depository credit intermediation was 36.2
hours in 2008. About 8 percent of employees in 2008, 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, which are open most evenings and weekends. To improve customer service and provide greater access to bank personnel, banks have phone centers, staffed by customer service representatives. Employees of phone centers spend most of their time answering phone calls from customers and often work evening and weekend shifts. Administrative support employees normally work in large processing facilities in the banks' headquarters or 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 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.

EmploymentAbout this section

The banking industry employed about 1.8 million wage and salary workers in 2008. About 74 percent of jobs were in commercial banks; the remainder were concentrated in savings institutions and credit unions (table 1). Table 1. Percent distribution of employment and establishments in banking by detailed industry sector, 2008
Industry segment Total Monetary authorities - central bank Depository credit intermediation Commercial banking Credit unions Savings institutions Other depository credit intermediation SOURCE: BLS Quarterly Census of Employment and Wages, 2008. Employment 100.0 1.2 98.8 73.8 12.6 11.4 1.0 Establishments 100.0 0.4 99.6 71.7 13.8 13.1 1.0

In 2008, about 85 percent of establishments in banking employed fewer than 20 workers. However, these small establishments, mostly bank branch offices, employed 38 percent of all employees. Banks are found everywhere in the United States, but most bank employees work in heavily populated States such as New York, California, Illinois, North Carolina, Pennsylvania, and Texas.

Occupations in the IndustryAbout this section

Banks employ various types of financial and customer service occupations. Office and administrative support occupations make up the largest portion of jobs in the industry, while 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 64 percent of jobs in the banking industry (table 2).Bank tellers, the largest occupation, 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. Tellers also sell bank services to customers. New

accounts clerks and customer service representatives answer questions from customers, and help them
open and close accounts and 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 manysecretaries, 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 banking and investing 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, stock investments, 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.
Table 2. Employment of wage and salary workers in banking, 2008 and projected change, 2008-2018. (Employment in thousands)
Employment, 2008 Occupation All Occupations Management, business, and financial occupations General and operations managers Financial managers Financial analysts Loan counselors and officers Professional and related occupations Computer specialists Office and administrative support occupations Bookkeeping, accounting, and auditing clerks Customer service representatives Loan interviewers and clerks Secretaries and administrative assistants NOTE: Columns may not add to total due to omission of occupations with small employment. SOURCE: BLS National Employment Matrix, 2008-18. Number 1,841.7 464.4 31.0 76.5 17.7 138.8 75.1 58.1 1,187.1 58.7 117.0 79.5 43.7 Percent 100.0 25.2 1.7 4.2 1.0 7.5 4.1 3.2 64.5 3.2 6.4 4.3 2.4 Percent Change, 2008-18 7.9 11.4 -2.3 -2.2 20.0 13.6 11.5 10.0 5.8 9.1 8.7 9.3 6.1

Training and AdvancementAbout this section

A high school education is usually the minimum required education 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. Since bank employees have access to large amounts of money and confidential financial information, most positions require a background check.

Office and administrative support occupations. Bank tellers and other clerks usually need only a
high school education. 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, banks will need more creative and talented people in their tellers windows to compete in the consumer 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 may be 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. Various banking-related associations and privately-operated 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. Additional training may improve workers chances of advancing to higher level execut ive, administrative, managerial, and professional positions. 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 aspects of finance 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 for educational courses.

Since the banking industry depends on technology, an understanding of banking computer systems and software can greatly improve one's skills and advancement opportunities.

OutlookAbout this section

Employment growth will be driven by increases in Americans wealth and investments and a growing number of local branches.

Employment change. Wage and salary employment in banking is projected to grow 8 percent between
2008 and 2018, compared with the 11 percent growth projected for wage and salary employment across all industries. Banks compete strongly to attract new customers. Because convenience of local branches is one of the most important factors for customers selecting a bank, the number of local branches will continue to increase. New branches frequently will be located in nontraditional locations, such as inside grocery stores. A growing number of branches will increase employment of branch managers and tellers. Deregulation of the industry allows banks to offer a variety of financial and insurance products that they were once prohibited from selling. Managing and selling these services will spur demand for 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 in financial services from nonbank establishments, such as insurance companies and independent financial advisor firms. 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 need help in retirement planning and investing which increases demand for financial managers and personal financial advisors.

Job prospects. Job opportunities should be favorable for office and 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 financial services backgrounds.

EarningsAbout this section

Industry earnings. Earnings of nonsupervisory bank employees involved in depository credit
intermediation averaged $605 a week in 2008, compared with $798 for workers in finance and insurance industries, and $608 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. Wages in the banking industry also vary significantly by occupation. Wages in the largest occupations in banking appear in table 3. Table 3. Median hourly wages of the largest occupations in depository credit intermediation, May 2008
Occupation General and operations managers Depository credit intermediation $42.98 All industries $44.02

Table 3. Median hourly wages of the largest occupations in depository credit intermediation, May 2008
Occupation Financial managers Loan officers Executive secretaries and administrative assistants Loan interviewers and clerks Customer service representatives New accounts clerks Bookkeeping, accounting, and auditing clerks Office clerks, general Tellers SOURCE: BLS Occupational Employment Statistics, May 2008. Depository credit intermediation 37.15 25.72 19.72 15.23 14.56 14.47 14.43 12.76 11.35 All industries 47.76 26.30 19.24 15.61 14.36 14.53 15.63 12.17 11.35

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 unionizedonly 1 percent are union members or are covered by union contracts, compared with 14 percent of workers across all industries.