Banking on change - the only safe investment

Professional bodies must lead rather than follow to stay relevant, says Gavin Shreeve

PROFESSIONAL bodies in financial services which have as their remit the task of educating practitioners are facing some tough challenges. Their very existence is being threatened by growing competition in an over-supplied market. But, if they harness traditions for the purpose of change rather than being hamstrung by outdated ideas and practice, then they also have an opportunity to help lead and set the agenda for higher education throughout the land.

Their task is not an easy one. The old homogeneity that bound sectors together has disappeared. Now fiercely competitive centrifugal forces have sent the industry's major players flying off in different directions in search of the product version of the Holy Grail.

Critical mass and access to cheaper capital resources have spawned a new generation of public companies that are vociferous in their denial that they have become banks: they are financial services companies, chime the commercial spin doctors. And the banks have jumped onto the bandwagon, stating in their mission statements their intention to become leaders in the provision of financial services.

At the turn of the century there were some 2,000 building societies; there are now about 80 left and while those remaining preach the value of mutuality, for many observers their long-term survival as mutuals must be in doubt. The barriers to entering financial services market are crumbling and the issues facing senior management are not about maintaining dedicated insurance firms, banks or building societies but about customer service, sales and marketing; about low costs of delivery and automation, of margins, profitability and shareholder value. Above all it is about how to compete with supermarkets, department stores and airlines which have all entered the business of financial services.

Central to any strategic thinking in this uncertain world has to be employment policies. The cosy world of precise demarcations, of paternalism and patronage has all but disappeared. As firms battle to control costs, more organisations are resorting to part-time or critical-time employment. Moreover, as the industry becomes increasingly complex organisations no longer "grow" all their expertise but look outside to employ specialist skills. The media is full of news about "banks" employing marketing expertise from the large chain stores.

There is little if any career-oriented employment at school-leaving level. But even graduate employment has taken on a different complexion. The explosion in the numbers going through tertiary education in the UK has led major employers in financial services to discriminate between graduates from different institutions. Now graduates are brought in for specific tasks and at varying levels and expectations, with only those from the "Ivy League" universities destined for fast-track senior management programmes.

All this has had a profound affect on policies relating to training and career development. Gone are the days of lifelong employment when training and education for a career were one and the same thing. Now employees are trained to do specific tasks and to sell their organisation's products. Large organisations do provide career opportunities by putting staff through advanced courses, but often there is a financial quid pro quo: the firm will pay the bill for the qualification providing the candidate passes; fail and it all turns into an interest-free loan. The relationship between employer and employee has gone through a profound change in just five to seven years.

Meanwhile, regulation is becoming more pervasive with demands for increased consumer protection in a fiercely competitive market for personal financial products. This has led to the imposition of examinations for insurance intermediaries; other areas such as mortgages and pensions are likely to follow.

And then there is the considerable competition from the providers as they all fight for a part of a market which is not only determined to rationalise itself, but which also sees training as an essential element in obtaining critical competitor edge. Where little more than a decade ago there were a mere handful of universities offering financial services qualifications, now there is a plethora of products, from the 20-plus undergraduate banking and financial services degrees to masters degrees in derivatives and a multitude of MBA programmes.

Professional bodies such as the Chartered Institute of Bankers once had a natural and unquestioned franchise to educate those within a narrowly defined industry. No longer. Today, professional bodies have to demonstrate their relevance to employers. To succeed they have to lead change in what is an open and competitive market. Professional bodies have not just to preach customer service through their syllabuses, but to deliver it.

Professional bodies that are dynamic and adaptable, because of their unique understanding of financial services both from a vocational and an academic point of view, are well positioned to take advantage of the shifting sands which characterise the financial industry today. If they listen to what the market is telling them - something that is not easy, as often the market itself does not know what it wants - then they can provide the relevant qualifications and training the industry needs.

The CIB has gone through a considerable metamorphosis in the past three years. It has listened to the market and then gone one step further to provide the financial services industry with a pertinent professional qualification that is also recognised as being of sufficient academic status to warrant the award of a Bachelor of Science (Hons) degree in financial services from UMIST.

It is part of a strategy to provide the financial services sector with a coherent set of qualifications that are independently benchmarked. One difficulty facing employers is understanding the worth of the plethora of qualifications on offer, all with unsubstantiated claims of quality and standard. All CIB qualifications now fit into a hierarchy of standards independently validated by UMIST. The content of these qualifications is drawn up through a unique partnership of both academics and professional practitioners.

Nobody would pretend it was all plain sailing. Both sides had to compromise at different levels to achieve this quite special mix and yet produce qualifications of the highest standard and integrity. Both the CIB and UMIST came to this arrangement with their own substantial reputations and they have produced a framework that could become a model for other partnerships between industry and commerce on the one hand and academia on the other.

Gavin Shreeve is chief executive of the Chartered Institute of Bankers.