Commercial Banking

Commercial Banking

Industry Outlook

The diversity of occupations in commercial banking makes it difficult to make projections about employment opportunities that ring true across the industry as a whole. Commercial banking, collectively, is an umbrella for a broad range of occupations, everything from front-line customer service in branch offices to loan production, regulatory compliance, and back office support.

Employment opportunities across the industry, including securities, commodities, and related occupations, are expected to grow about as fast as the average for all careers through 2026, according to the U.S. Department of Labor (DOL). As Baby Boomers enter their retirement years, many will turn to brokers or financial advisors for help managing their retirement nest eggs, potentially stirring demand for personal bankers and securities brokers.

A pickup in the housing market—as well as in the number of loans being made to businesses—in many cities has sparked growth in employment of mortgage brokers, bank loan officers, and loan servicers. The DOL reports that “banks and other lending institutions are granting an increasing number of loans to people and businesses…growth in the number of jobs could be somewhat tempered by the expanded use of loan underwriting software, which has made the loan application process much faster. Some loan applications can be completed online and underwritten automatically, allowing loan officers to process more applications in a much shorter period of time.” Employment for loan officers in commercial banks and savings institutions is expected to grow by 3 percent from 2016 to 2026, according to the DOL. It reports that “as bank customers increasingly use mobile and online banking services, the need for bank branches will decline. Banks have decreased the number of branches in operation in recent years, and this trend is expected to continue.”

Employment for financial managers (treasurers, finance officers, credit managers, cash managers, risk managers, etc.) at commercial banking and savings institutions is expected to grow by 16 percent through 2026, according to the DOL, or much faster than the average for all careers. The DOL says that “candidates with expertise in accounting and finance—particularly those with a master's degree or certification—should enjoy the best job prospects. An understanding of international finance and complex financial documents is important.”

Job opportunities for financial analysts (buy-side analysts, sell-side analysts, portfolio managers, fund managers, ratings analysts, and risk analysts) are expected to grow by 12 percent from 2014 to 2024, according to the DOL, or faster than the average for all careers. Financial deregulation expanding the scope of services banks are allowed to offer their customers will spur demand for financial analysts and personal financial advisors. “Wealth management will move alongside deposit-taking as a baseline service for retail banking,” according to Retail Banking 2020: Evolution or Revolution?, a report from PricewaterhouseCoopers. However, banks will continue to face considerable competition in financial services from non-bank establishments, such as insurance companies, tech companies (Facebook, Apple, etc.), and independent financial advisor firms.

Employment for information security analysts is expected to grow by 28 percent from 2016 to 2026, according to the DOL, or much faster than the average. Demand will be strong as the banking industry continues to strengthen its IT security infrastructure as a result of cyberattacks. 

The increasing use of distributed ledger and blockchain technology, data analytics, cloud computing, and artificial intelligence (AI) will create strong demand for tech workers who are both familiar with these technologies and the banking industry. There is currently a shortage of technology workers with this expertise. The staffing firm Robert Half recently listed AI, cloud computing, and data analytics and database management software (SQL, VBA) as in-demand technology skills in its Accounting and Finance Salary Guide 2019. “The largest banks are automating work anywhere they can, especially routine work like cutting and pasting data from one app to another," according to American Banker. “Use of AI and robotics will only grow provided banking regulators become more open-minded about them. This will dramatically change banking jobs and the skills required to do them. People will be needed to design and train bots and AI engines, to test and oversee them, and to manage the employees who do those jobs.”

Job opportunities should be favorable for office and administrative support workers because they make up a large proportion of bank employees and because 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.

Employment for bank tellers is expected to decline by 8 percent from 2016 to 2026, according to the DOL. Seventy percent of Americans surveyed in 2018 said they most often accessed their bank accounts via online and mobile channels, according to an ABA/Morning Consult survey. Eighteen percent reported still using their bank branch most often to access their bank accounts. “Mobile banking has truly gone mainstream in recent years and continues to gain traction among consumers of all ages,” said ABA senior vice president Nessa Feddis. “While many consumers have a favorite banking channel, we’re continuing to see most bank customers using a mix of the account management methods available to them.” In response to changing banking preferences, the number of bank branches has declined in recent years—from 83,663 in 2013 to 78,774 in 2017, according to the FDIC. Nearly 1,950 bank branches closed in 2018, according to S&P Global Market Intelligence.  

Overall, banks in the U.S. report trouble recruiting and retaining millennials. Fifty-one percent of banks surveyed for the Crowe 2018 Banking and Compensation Survey reported that retaining young talent was either “very challenging” or “somewhat challenging.” Issues that deterred millennials from entering or staying in the industry include low levels of compensation, the perceived lack of opportunity for promotion, and a desire for more job flexibility. Despite the professed hiring difficulties, only 19 percent of banks reported having developed specific strategies for attracting and retaining members of this demographic group.

While the overall outlook for commercial banks remained consistent with pre-pandemic projections, the 2020 coronavirus outbreak affected many areas where banks participate, such as in new business and home loans. For individual customers, online banking and mobile apps helped them navigate social restrictions and lockdowns. An overall economic slowdown due to business closures, supply chain disruptions, and unemployment also created challenges for banks. However, some of their core businesses, such as credit cards and personal banking remained strong. Many banks took a supportive role in the crisis by working with business customers to help them weather the bad times. Government-mandated hiatuses for foreclosure actions and other steps might take against debtors in default, or "loan stress," forced banks to work around these situations. Many sought to cut costs, temporarily close branches, and reopened only with social distancing guidelines in place.

The commercial banking industry in the U.S. was valued at $666 billion, with 75,260 businesses employment more than 1.9 million people, by the end of 2020, according to the research group IBISWorld. Profitability was expected for 2021 through 2025, due to the recovery of global health and the economy. Moving forward, government support will continue to benefit commercial banks, with oversight by government agencies continuing as well. Large, well-established commercial banks will grow post pandemic at a faster pace than smaller savings institutions. Innovation and adoption of new technologies is expected to continue in the commercial banking industry in the near future. A Deloitte report describes its take on the post-pandemic banking industry as follows: "In addition to the financial fallout, COVID-19 is reshaping the global banking industry on a number of dimensions, ushering in a new competitive landscape, stifling growth in some traditional product areas, prompting a new wave of innovation, recasting the role of branches, and of course, accelerating digitization in almost every sphere of banking and capital markets." Another aspect of banking that is also changing is that more people want banks to "help address income inequality, racial and gender inequity, and climate change." Sustainable finance and banking with a purpose will become increasingly important for societies.