Training Download for New Generation of Commercial Lenders

School is in session not only for children and college students around the country but also for commercial lenders.

Banks are increasingly providing training to their commercial lenders because of a renewed focus on credit quality and increased demand for loans and talented loan officers who can deliver them, industry experts said. More banks are looking for courses that blend the best of online and classroom learning and cover topics ranging from commercial underwriting to small-business lending.

"As the environment continues to change, we need to make sure our lenders are also adapting," said Matthew Hall, senior vice president of business segment sales and training at Huntington Bancshares in Columbus, Ohio. "What you learned 10 years ago is maybe different now. They need to stay up to date on changes in regulation, competition and the market."

There are several reasons behind the resurgence in training programs, experts said. No. 1, a generational shift to younger loan officers is underway. The largest banks used to offer training for commercial lenders, which other banks would benefit from by eventually hiring these lenders, said Michael Meakem, president of the Center for Financial Training, which provides training for banks and credit unions. But banks cut those programs, and their alumni are beginning to retire.

"The days of picking off [experienced] lenders from other banks is not an option anymore," Meakem said.

Additionally, after the financial crisis, regulators and bank executives began putting more emphasis on ensuring strong credit quality. But since banks had previously cut internal training programs, many had to scramble to find alternatives, said Rex Beach, founder of Shockproof Training, which provides commercial credit training.

Moreover, competition remains stiff for the best commercial loans, and banks are looking for ways to improve the customer experience and deepen relationships. For example, branch employees are being asked to undergo training in specialty areas like small-business lending so they could better discuss these products with potential borrowers, said Nick Miller, president of consulting firm Clarity Advantage.

"As banks have tried to generate small-business lending, they needed to improve the skills of their branch managers so they could have credit conversations with customers," Miller said. "Some of that is regulatory, but it is also just knowing your customers."

Many banks are looking for programs that are convenient, flexible and cost effective, industry observers said. Since younger employees are being hired, many institutions are turning to online courses. These also happen to be less expensive and require less time away from a job than having an employee attend a session in person.

"The new generation of banker today is much more tech savvy," said Jim Edrington, executive vice president of the American Bankers Association's professional development group. "Online learning has come a long way. It is much more interactive now."

There has been a rise in demand for comprehensive credit courses, commercial real estate loan underwriting and assessing risk, but classes, such as one about understanding contractor financial statements, are also appealing to banks, Beach said. That particular course drew 3,000 people, he said.

There is a greater emphasis on courses that teach employees sales skills and how to develop business relationships, said Paul Schaus, CEO of consulting firm CCG Catalyst. However, those skills are difficult to teach, especially through an online course, he added. Banks usually need to supplement that learning with mentoring and ongoing support.

Banks are demanding more from the courses, too, experts said. Although there has been significant demand for online courses, some banks and their employees are suffering from "e-learning fatigue," said Josh Haims, who heads the learning and development practice at the consulting firm Deloitte.

This has translated into banks wanting to be more involved in training, looking for continuing support once the class ends and seeking out blended learning, which are classes that combine some online work with in-person discussions.

Ouachita Independent Bank in Monroe, La., liked that employees could complete Shockproof's training individually or as a group, said Teena Ward, credit analysis department manager at the bank. The group setting "provides camaraderie and builds teamwork" as analysts, lenders and credit officers all work together, she added. This has helped the bank, which has $645 million of assets, reinforce its own credit standards without having to design all of its own training.

"Employees see the training as the bank investing in them," Ward said. "They see it as the bank is willing to spend some money and allow them some time to learn something that is valuable to them. They see the value in learning and being better at what they do."

The $64 billion-asset Huntington sees that kind of reinforcement as necessary to retain good young workers, Hall said.

"If you think about millennials and their desire to continue to develop, you almost need training because you have to have a good learning path," Hall added. "They don't tend to be as committed to an organization if they don't see a path where they can develop. It's a cultural change over the last 10 years. We offer training partly because it is the right thing to do and because of competition."