Small community bank leaders seem to be focused on adding lenders — not technology staff — to their institutions, according to Bank Director’s 2024 Compensation & Talent Survey.
More than half of respondents to the survey expect to increase commercial and business lending staff at their institutions in 2024, compared to 37% that expect to increase technology and IT staff. This was even more pronounced at smaller institutions. Seventy-two percent of respondents at banks with $1 billion in assets or less were focused on adding lenders, but only 19% were hiring technology or IT staff. Meanwhile, 53% of respondents at banks with more than $1 billion in assets were focused on adding technology and IT staff, according to a Bank Director analysis of the complete results.
David Robinson, the director of fintech partnerships at Kansas City, Missouri-based Academy Bank, understands the short and long-term trade-offs executives make between investing in lending or technology talent. While commercial lending “carries the freight” at institutions like the $2.7 billion Academy, which is a unit of Dickinson Financial Corp., he thinks banks in general will need more technology talent to deliver and manage financial services in the future.
“I see tech talent and the future of operations and technology as our bank’s challenge,” he says.
As financial institutions increasingly leverage data to make decisions and partner with tech vendors outside of their core provider, they will need to build their in-house competencies and capabilities to oversee and maintain these partnerships. But that’s only possible if leadership teams prioritize the technology roles, skill sets and capabilities their institutions will need to execute future growth plans and strategies.
“All these integrations and connections have to be maintained, which is becoming a larger maintenance issue for our staff,” wrote a chief operating officer at a privately held bank that has between $1 billion and $5 billion in assets in Bank Director’s 2023 Technology Survey. “Banks eliminated all these positions years ago when we moved away from [in-house] systems to the core providers. Now we are challenged to find and maintain the staff that can support the various systems.”
A small pool of tech employees can be a talent risk. As part of an executive search engagement with a $1 billion bank, Brian Love, head of banking and fintech at the executive search firm Travillian, found the only employee at this bank who knew technology was the chief technology officer, who functioned more as the head of information technology. No one was acting like an innovation lightning rod for the organization.
“Across the board, no one was a tech lynchpin,” he says.
Love sees this siloed knowledge as a potential succession risk and a complacency risk, if boards and management teams don’t address these gaps.
And yet, only 29% of respondents to Bank Director’s 2024 Compensation & Talent Survey said their bank had a chief technology officer or equivalent and 28% have a chief information officer. These roles are concentrated at larger community banks: 45% of respondents at institutions with more than $1 billion in assets said they had a CTO or equivalent title, while 16% of respondents at institutions with less than $1 billion did.
Growing technology capabilities at Academy has meant hiring additional staff, Robinson says. The bank has a data and analytics employee who can create reports to help decision-making, such as actions the marketing team can take. But it is looking for a head of data strategy to oversee those initiatives and help the bank think about its data needs and usage in the future.
“We’ve gotten some value out [of our data lakehouse], but we probably haven’t gotten enough value out of it. But it’s a strong focus [for] us going forward from a strategic and governance standpoint,” he says.
But technology talent extends throughout a bank’s organization chart, and there’s room for community banks to bolster expertise as well. Thirteen percent of respondents to Bank Director’s 2023 Technology Survey said their bank employs developers and programmers, and 12% said their bank has data scientists on staff.
Small banks can use in-house programmers and developers to help them manage their technology infrastructure, but small teams can be a talent risk as well. If a bank has one or two employees who maintain important systems, the knowledge and maintenance of those systems could be vulnerable if either is promoted out of the role or leaves the company.
Not having a deep or wide enough talent bench could hold back bankers’ technology ambitions:
40% of respondents to the 2023 Technology Survey think they need to acquire talent for technology upgrades or implementation, and 58% say midlevel tech staffing is a deficiency in their bank’s allocation of resources to technology and innovation.
Down the organization chart, Academy Bank is focused on bolstering the current team that manages the bank’s APIs, or application programming interfaces, and adding more people to its data team, Robinson says.
“As we hire into our technology organization, [those roles] will be focused on expanding the digital integrations between applications and between business segments more so than they have been in the past,” he says.