Massachusetts banks and credit unions are trying different approaches to the threat of losing talent to megabanks. iStock illustration

Starting this month, Bank of America will be paying its front-line staff at least $25 an hour.

That $50,000 annual salary has the potential lure away some branch and back-office staff at Massachusetts’ community banks and credit unions, or it could block them out of recruiting bright, young talent if they can’t compete.

And two local lenders are taking two different approaches to the problem.

Metro Credit Union met BofA’s challenge with a similar salary increase in 2022, a year after BofA announced its intent to raise its base pay in 2021.

Under the credit union’s “Universal Program Model,” all incoming retail branch and member service center employees earn a starting annualized compensation of at least $50,000 with opportunity for additional compensation through Metro’s competitive bonus programs. Existing employees were also eligible for the program.

At the time, Metro Credit Union President CEO Robert Cashman characterized the move as a response to surging inflation and housing costs, while also laying out pathways for employees to grow within the organization to boost retention.

Building Pathways for Upskilling

Looking back on the decision today, Cashman said the labor market obliges credit unions and community banks to make sure employees are paid fairly.

“It’s just not about the concept of a ‘living wage,’” Cashman said. “It’s really making sure that we match individual skill set, what they bring to the table, and the task that’s being done that is being paid appropriately. The combination of that in terms of looking at the ranges – as well as making sure that our annual increases, our merit increase opportunities are not only reasonable, but competitive in the marketplace – has allowed us to maintain our workforce.”

Cashman added that 20 people have “boomeranged” back to the credit union after leaving for other opportunities since Metro raised wages and added training resources for employees.

“I don’t think people would be coming back if the compensation and benefits package was not attractive,” he said.

Local lenders see a need to offer new hires more than just matching Bank of America’s starting salaries. They’ve also stood up skill-building pathways for junior employees. iStock illustration

A School-to-Branch Pipeline

Reading Cooperative Bank has taken a different approach. The bank has been focused on developing and retaining talent through its apprenticeship program that allows high school students to earn working experience at the bank.

“We take students with absolutely no prior banking experience,” Reading Cooperative Bank Chief Human Resource Officer Maxine Hart said. “We train them first in teller functioning. We then move them into – I’ll use generic language – universal banker one, and then a universal banker two, into an assistant branch manager and through the retail roles that we have. If somebody comes to our bank with absolutely no banking [experience], we similarly put them through a robust training, through teller functioning, universal one, universal two.”

Reading Coop hires high school students at $19 an hour, and if they reach the universal banker one level they receive a pay increase of a minimum of $24 an hour.

The bank experiences a high level of employee retention through the program, Hart said.

“I build long-term relationships with the students who have shown tremendous loyalty to us because we invested in them and we supported them through their college, because they could then apply so they get tuition reimbursement,” she said. “I’m finding that the younger employees, if you’re showing loyalty to them, they certainly showing you the same loyalty back.”

Sam Lattof

Branch Jobs Changing, Harder

Reading Coop and Metro executives both said they think their strategies will let them compete for talent with Bank of America. Cashman even noted Metro has seen many applicants show a greater desire to work for a local or regional institution compared to a larger bank or credit union.

But BofA isn’t the only competitor.

Due to the soft skills they learn at community banks and credit unions, workers can find success in various industries. Even inter-company dynamics can create challenges.

“I can’t offer the same flexible work arrangements in a retail setting that other back-office employees customer service it can offer. So, I feel a little more disadvantaged in the retail sector because we just can’t offer remote work options,” Hart said. “A lot of our back-office roles do have flexible work arrangements, so you’ve built in a lot of inequity in your immediate organization.”

Competition for front-line workers comes as the role of branch employees has evolved substantially in only a few years – and has arguably gotten harder.

“I think any job in this environment right now is difficult,” Cashman said. “Primarily because the fact that the socioeconomic changes that have taken place and the geopolitical forces causing consumer behavior to change. I think, coming out of COVID, more people are focused on the level of service they receive. They’re much more demanding to receive fast, quick and good service. It’s just not the skillset of the technical aspects of banking, it’s the soft skills that are important.”

Customers want more consultation in today’s banking landscape, Hart said.

“I think they understand customer need and being more of a financial advisor in a way they certainly need,” she said. “There’s a lot more of uncovering those customer needs, and meeting those needs and making sure that you are offering the right referrals and the right products to meet those needs. It isn’t simply a simple transacting process.”