 Banking
 Industry
Overview
Banks safeguard
money and valuables and provide loans, credit, and payment services,
such as checking accounts, money orders, and cashier's checks. Banks
also may offer investment and insurance products, which they were once
prohibited from selling. 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 role--accepting deposits
and lending funds from these deposits.
There are
several types of banks, which differ in the number of services they
provide and the clientele they serve. Although some of the differences
between these types of banks have lessened as they begin to expand the
range of products and services they offer, there are still key
distinguishing traits.
Commercial Banks
Commercial
banks, which dominate this industry, offer a full range of services for
individuals, businesses, and governments. These banks come in a wide
range of sizes, from large global banks to regional and community banks.
Global banks are involved in international lending and foreign currency
trading, in addition to the more typical banking services. Regional
banks have numerous branches and automated teller machine (ATM)
locations throughout a multi-state area that provide banking services to
individuals. Banks have become more oriented toward marketing and sales.
As a result, employees need to know about all types of products and
services offered by banks. Community banks are based locally and offer
more personal attention, which many individuals and small businesses
prefer. In recent years, online banks--which provide all services
entirely over the Internet--have entered the market, with some success.
However, many traditional banks have also expanded to offer online
banking, and some formerly Internet-only banks are opting to open
branches.
 Savings
Banks and Savings and Loan Associations
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 individuals.
Credit unions are another kind of depository institution. Most credit
unions are formed by people with a common bond, such as those who work
for the same company or belong to the same labor union or church.
Members pool their savings and, when they need money, they may borrow
from the credit union, often at a lower interest rate than that demanded
by other financial institutions.
Federal Reserve Banks
Federal Reserve banks are Government agencies that perform many
financial services for the Government. Their chief responsibilities are
to regulate the banking industry and to help implement our Nation's
monetary policy so our economy can run more efficiently by controlling
the Nation's money supply--the total quantity of money in the country,
including cash and bank deposits. For example, during slower periods of
economic activity, the Federal Reserve may purchase government
securities from commercial banks, giving them more money to lend, thus
expanding the economy. Federal Reserve banks also perform a variety of
services for other banks. For example, they may make emergency loans to
banks that are short of cash, and clear 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 to start or expand a
business or to purchase inventory and capital equipment. The consumer
lending department handles student loans, credit cards, and loans for
home improvements, debt consolidation, and automobile purchases.
Finally, the mortgage lending department loans money to individuals and
businesses to purchase real estate.
The money to
lend comes primarily from deposits in checking and savings accounts,
certificates of deposit, money market accounts, and other deposit
accounts that consumers and businesses set up with the bank. These
deposits often earn interest for the owner, and accounts that offer
checking provide an easy method for making payments safely without using
cash. Deposits in many banks are insured by the Federal Deposit
Insurance Corporation, which ensures that depositors will get their
money back, up to a stated limit, if a bank should fail.
Technology is having a major impact on the banking industry. For
example, many routine bank services that once required a teller, such as
making a withdrawal or deposit, are now available through ATMs that
allow people to access their accounts 24 hours a day. Also, direct
deposit allows companies and governments to electronically transfer
payments into various accounts. Further, debit cards, which may also
used as ATM cards, instantaneously deduct money from an account when the
card is swiped across a machine at a store's cash register. Electronic
banking by phone or computer allows customers to pay bills and transfer
money from one account to another. Through these channels, bank
customers can also access information such as account balances and
statement history. Some banks have begun offering online account
aggregation, which makes available in one place detailed and up-to date
information on a customer's accounts held at various institutions.
 Advancements
in technology have also led to improvements in the ways in which banks
process information. Use of check imaging, which allows banks to store
photographed checks on the computer, is one such example that has been
implemented by some banks. Other types of technology have greatly
impacted the lending side of banking. For example, the availability and
growing use of credit scoring software allows loans to be approved in
minutes, rather than days, making lending departments more efficient.
Other
fundamental changes are occurring in the industry as banks diversify
their services to become more competitive. Many banks now offer their
customers financial planning and asset management services, as well as
brokerage and insurance services, often through a subsidiary or third
party. Others are beginning to provide investment banking services that
help companies and governments raise money through the issuance of
stocks and bonds, also usually through a subsidiary. As banks respond to
deregulation and as competition in this sector grows, the nature of the
banking industry will continue to undergo significant change.
Employment
 The
banking industry employed about 1.8 million wage and salary workers in
2006. About 7 out of 10 jobs were in commercial banks; the remainder
were concentrated in savings institutions and credit unions.
In 2006, about 84
percent of establishments in banking employed fewer than 20 workers.
However, these small establishments, mostly bank branch offices,
employed 36 percent of all employees. About 64 percent of the jobs were
in establishments with 20 or more workers. Banks are found everywhere in
the United States, but most bank employees work in heavily populated
states such as New York, California, Illinois, Pennsylvania, and Texas.
Working
Environment
The average workweek for nonsupervisory workers in depository credit
intermediation was 35.7 hours in 2006. Supervisory and managerial
employees, however, usually work substantially longer hours. About 1 out
of 10 employees in 2006, mostly tellers, worked part-time. Supervisory
and managerial employees usually work substantially longer hours.
Working
conditions also vary according to where the employee works. Employees in
a typical branch work weekdays, some evenings if the bank is open late,
and Saturday mornings. Hours may be longer for workers in bank branches
located in grocery stores and shopping malls, which are open most
evenings and weekends. 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.
To improve customer
service and provide greater access to bank personnel, banks are
establishing centralized phone centers, staffed mainly by customer
service representatives. Employees of phone centers spend most of their
time answering phone calls from customers and must be available to work
evening and weekend shifts.
Administrative support employees may work in large processing
facilities, in the banks' headquarters, or in 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.
 Commercial
and mortgage loan officers often work out of the office, visiting
clients, checking out loan applications, and soliciting new business.
Loan officers may be required to travel if a client is out of town, or
to 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.
Industry
Forecast
The number of local branches and offices in the United States has been
steadily increasing, and this trend is expected to continue to result in
moderate growth in employment in banking.
Wage and salary employment in banking is projected to increase by about
4 percent between 2006 and 2016, compared with the 11 percent growth
projected for wage and salary employment across all industries. Growth
will result from banks refocusing on the local branch as a critical
means of servicing customers, because branch location is often the most
important factor for customers in selecting a bank. New branches also
will be appearing more frequently in nontraditional locations, such as
inside local grocery stores or shopping malls. Growth will likely be
greatest in areas where the population is growing.
 The
combined effects of deregulation, technology, demographic changes, and
mergers will continue to affect total employment growth and the mix of
occupations in the banking industry. Deregulation of the banking
industry allows banks to offer a variety of financial and insurance
products that they were once prohibited from selling. The need to
develop, analyze, and sell these new services will spur demand for
securities and financial services sales representatives, 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 -- particularly in lending -- from nonbank
establishments, such as consumer credit companies and mortgage brokers.
Companies and individuals now are able to obtain loans and credit and
raise money through a variety of means other than bank loans. Therefore,
some loan officers may be replaced by financial services sales
representatives, who sell loans along with other bank services.
Advances in technology should continue to have a significant effect on
employment in the banking industry. Demand for computer specialists will
grow, as more banks make their services available electronically and
eliminate much of the paperwork involved in many banking transactions.
On the other hand, these changes in technology will reduce the need for
some office and administrative support occupations. Employment growth
among tellers will be limited as customers increasingly use ATMs, direct
deposit, debit cards, and telephone and Internet banking to perform
routine transactions. The number of electronic payments has increased
and checks now account for less than half of consumers' monthly bill
payments. In addition, technological improvements, such as digital
imaging and computer networking, are likely to lead to a decrease or
change in the nature of employment of the "back-office" clerical workers
who process checks and other bank statements. Employment of customer
service representatives, however, is expected to increase as banks hire
more of these workers to staff phone centers and respond to e-mails.
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 may need help in retirement planning and
investing wealth inherited from their parents and so may seek the
services of the various financial professionals in banking, such as
financial managers, and securities, commodities, and financial services
sales agents.
In the past, consolidation within the banking industry contributed
significantly to employment declines, but the effect of mergers on
employment within the industry is expected to be minimal in the years
ahead. Merger activity has slowed recently, and a balance is beginning
to develop between the numbers of new banks established and existing
banks lost due to mergers and acquisitions.
Related
Degree Fields
Professional
Associations/Other Resources
Note: Some resources in this section are provided by the US Department
of Labor, Bureau of Labor Statistics.
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