June 11, 2018

Shifting habits, technology, stagnant economy diminish CT's financial-services jobs

HBJ Photo | Steve Laschever
HBJ Photo | Steve Laschever
Farmington Bank Chairman, CEO and President John Patrick Jr. says technology allows his 25 branches to serve customers with fewer workers.
Photo | HBJ File
Simsbury Bank CEO Martin Geitz (right) flanked by CFO John Sudol, says his bank has benefited from its investments in mobile banking and other smart technologies.
Photo | HBJ File
The Hartford has launched a claims-handler apprentice program, to beef up its claims staffing.
Susan Winkler, Vice President, Financial-Services Cluster, MetroHartford Alliance
Donald Klepper-Smith, New Haven economist and banking adviser

Connecticut's financial-services sector, covering banks, investment firms and insurers, continues to shed jobs as providers try to keep pace with consumers who prefer to remotely bank or file claims using smartphones and other digital devices.

Employment data from the state Department of Labor shows the financial-services industry shed 600 jobs in April, while the number of people employed at local banks, investment firms and insurers is down 13.5 percent since Jan. 2007, indicating the sector has never recovered from the Great Recession.

The industry employs 107,600 people today, or about 6.4 percent of the state's total workforce, DOL data shows.

Meantime, manufacturing and health care are among a handful of sectors confronting the opposite challenge: a shortage of qualified labor. Stepped up factory hiring across America was a major contributor to the nation's strong May job growth, adding 223,000 jobs and cutting the U.S. jobless rate to 3.8 percent.

Bankers, insurers and economists say the employment contraction in financial services is being significantly impacted by the state's overall slow-moving economy and the adoption of new technology, which permits banks and insurers to process just as many car, mortgage or home-equity loans, or file property-damage claims as before, but with fewer staff.

Indeed, some banking experts, including former Citigroup CEO Vikram Pandit, predict the industry will shed 30 percent of its jobs, or more, in the coming years as technology advances and becomes more prevalent.

Susan Winkler, a former banking and insurance executive who is vice president of MetroHartford Alliance's financial-services cluster, ascribes the shrinkage of traditional banking and insurance jobs to two factors.

"First, we've got a transformation in the way we work,'' Winkler said, referring to the information automation, artificial intelligence and digitalization that is replacing human skills for customer sales and support, information technology, even marketing.

"Second is the aging workforce,'' Winkler said of Connecticut's graying talent headed for retirement or sidelined by health issues.

But amid their jobs decline, Winkler says financial services is gaining jobs in certain categories, such as banking and insurance analysts, risk assessment and regulatory compliance. She points to the rise in jobs postings that require both hands-on and analytical skills.

"The industry is being fed differently with talent,'' Winkler said.

For banks, the picture is pretty much the same, she said. However, banks have succumbed to competitive pressures over time and outsourced many of the tasks they once did internally, such as auditing/accounting, and data/information processing.

Connecticut's 41 federally insured banks employed 14,872 full-time workers at the end of March, according to the Federal Deposit Insurance Corp.

"The keyword is 'ultra-competitive,' '' said New Haven economist and banking adviser Donald Klepper-Smith, of DataCore Partners. Klepper-Smith said banks' shrinking payrolls reflect the pressures of vying for thin returns on loans and deposits in a state that has barely recovered eight in 10 jobs lost in the Great Recession and whose population continues to suffer outmigration.

"What you have is a situation where technology is also playing a role,'' he said.

Because of customers' embrace of digital banking, Farmington Bank, for instance, now has only a handful of staff in each of its 25 branches in Connecticut and western Massachusetts vs. seven or so previously, said CEO and President John Patrick Jr.

"I don't think the jobs are going other places,'' Patrick said. "We're just working smarter with newer technology.''

The ascendance of a number of Hartford area financial-technology, or "fintech,'' providers plying their services to financial institutions across Connecticut and New England, too, is having an impact. They offer algorithm-based digital solutions to help banks meet their customers' needs.

Simsbury Bank & Trust has shrunk headcount while expanding its customer base the past two years, said Martin Geitz, president and CEO of the $514 million-asset community lender and its parent, SBT Bancorp.

"Banks are a reflection of the economy,'' said Geitz, past president of the Connecticut Community Bankers Association. "Regrettably, Connecticut has had two consecutive years of a contracting economy. The state has still yet to recover all of the jobs lost during the Great Recession after the financial crisis. … The weak economy means that the opportunities for banks to do business with companies and consumers is also challenged."

Still, Simsbury Bank has continued to expand its retail-commercial customer base, Geitz said, offering them a wider variety of online account-management, loan and other services due to its and other lenders' ongoing investments in mobile banking and other "smart" technologies.

"Thanks to our technology innovations, fewer customers visit our branches for routine transactions than 10 or 20 years ago," he said. "They are handling routine transactions through online banking and mobile banking. As such, we don't need as many people in our branches."

Moreover, banks also have deployed labor-saving technology in their internal operations, such as account settlements, risk assessment, auditing and regulatory compliance, Geitz said.

" … Our team members become more productive as many manual activities disappear,'' he said. " … The staffing levels we needed 10 or 20 years ago to perform our operational activities have declined."

Insurers still have needs

Winkler, of the MetroHartford Alliance, said insurers will still need to fill certain jobs despite the increasing role of technology.

"You're not going to get rid of claims handlers,'' Winkler said as an example. "But claims handlers are going to have to learn how to do their jobs differently.''

Indeed, local insurers like The Hartford will still need to replenish talent pools as aging workers retire. A 2013 report in PropertyCasualty360 said the industry would need to fill 400,000 positions by 2020.

The Hartford has responded to that threat by developing an apprentice-training program with Capital Community College to groom the next generation of claims handlers.

In Connecticut, three apprentices will graduate in October, with six more by Jan. 2019 — all of whom likely will be offered permanent roles that include $45,000 starting salaries and benefits.

The program also exists in Florida, with Seminole College, and in Arizona, with Rio Salado College.

Through a spokesman, The Hartford said it's "pleased" with the quality and productivity of its first class of apprentices.

"We are committed to the city of Hartford and the state of Connecticut,'' the spokesman said. "We continue to be a significant employer in the region and are actively hiring to support the future growth of the organization."

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