Not Enough Hours in the Day?

How many hours do you work in a day?

Urban Dictionary defines the phrase “bankers’ hours” as a joke—“Working or being open for the shortest and most inconvenient amount of time. . .also includes a long lunch break and every possible holiday off.” The reality, of course, is very different.

The issue has taken on greater relevance recently because of the buzz generated by Goldman Sachs’ decision to create better conditions for investment banking analysts. The company has developed a ‘junior banker task force’ to improve the working environment and nurture careers, and is even discouraging analysts from working weekends, since this puts more pressure on entry-level bankers and support staffers.

It’s no secret that Goldman has taken a public battering in the past few years, most memorably being described as a “vampire squid” in a scathing article in Rolling Stone magazine. But this is actually an industrywide concern—in the public mind, the stereotype of lucrative compensation is balanced by the reality of 100-hour workweeks.

The issue was highlighted most tragically by the death earlier this year of a Bank of America intern who was completing a seven-week internship program in London. By some accounts, at least, the long hours worked were a factor.

As industry observers often point out, the banking industry is by no means alone in featuring a grueling schedule. Consider healthcare—more than a decade ago, the Accreditation Council for Graduate Medical Education capped hours for hospital residents at a staggering 80 hours a week. And remember, this is a field where a mistake can literally be lethal.

Nor is this confined to the United States. A survey this summer of financial services professionals in Singapore revealed that the culture of long hours in equally entrenched there. Would similar surveys in markets around the world be any different?

Even the industry’s most aggressive boosters don’t expect the culture to change anytime soon. It’s understandable that not everybody has much sympathy for recent college graduates making six-figure salaries (even if they carry huge college debts). Besides, it’s a difficult economy right now, and everything from global competition to constant technology-enabled transformation only adds to the pressure. But the truth is that this is an industry that thrives on pressure—it’s in the DNA. That’s exactly why it’s not for everyone.

Still, no less a force than Goldman Sachs CEO Lloyd Blankfein has been urging interns and other younger professionals to pursue interests outside the industry. And he’s right, it’s good to get a life.

If only we had the time.

The Bank of America Discount

Not so long ago—just last fall, in fact—Bank of America was in the news for all the wrong reasons. The company had instituted a $5 debit card fee, and faced a strong consumer backlash as a result. The incident was at least partly responsible for giving rise to the movement dubbed Bank Transfer Day.

It was likely in the works earlier, of course, but the country’s second largest back is back in the spotlight with a very different initiative. This one, however, is designed to help customers save money. In a pilot program being rolled out this week (to employees only, for now), the bank’s online customers will receive discounts from selected retail partners based on their previous spending patterns. Customers don’t even need to sign up for the service or go to a separate site, a la Groupon, discounts will be awarded in the form of cash payments once a month.

The savings won’t be immediate. Online customers will see discount offers embedded in their bank statements, or potentially in a separate tab, and buy what they choose, paying full price, then receive cash back in their accounts.

Perhaps most interestingly, the bank itself will receive no compensation from the retailers and merchants involved. It will instead use the discounts to extend relationships with existing customers—who will use their bank accounts and credit cards in the process—and of course draw new ones. For the record, BofA says it won’t share incoming customer spending data with the retail partners or anyone else, through presumably it will use the information internally.

While other banks have launched similar efforts, BofA is likely the largest financial services institution to enter this nascent field. This also means that there will be a flood of other financial institutions plunging into the business. As consumer spending patterns and habits evolve in the age of online shopping driven by social media tools and techniques, this is exactly the kind of forward-thinking initiative the industry needs to build on.

Many financial services firms still have the mentality that, in a sense, they need to remain above the fray. They finance these initiatives but they’re not directly involved, since it’s not a core competency. That may be true, but the reality is that they have the resources, they have the technology, they have the information, and most of all they have the customers. For banks to stay completely out of the transaction means denying themselves potentially significant revenue streams.

As other financial institutions enter the fray, we will likely see the process becoming simpler and more commoditized—the savings will be immediate, retailers will share the revenue, and so on. If that’s the case, then this initiative could be seen as a major turning point. Let us know your thoughts by posting below, or Tweet @bankingdotcom.

Wall Street Woes

Despite Washington’s last minute decision to raise the debt ceiling, the stock market has tumbled in the last week, leaving all sectors of the market questioning its financial stability. On August 8, 2011, the Dow plummeted more than 600 points as the market re-rated the U.S. growth outlook.

Bank of America was among those hardest hit. Forbes reported, “Bank of America was among the session’s worst performers, with shares being dumped amid a surge in volume. The bank is facing a $10 billion lawsuit from American International Group over mortgage-backed securities tied to its Countrywide and Merrill Lynch units. BofA’s stock was down a stunning 20.1%.”

However, last week the Wall Street Journal reported that not all banks have a negative outlook on the market. Reporter Francesco Guerrera said, “On one hand, the unexpected bounty provides them [banks] with cheap funding that can be put to work in the form of loans. At the same time, the new deposits swelled their liabilities (deposits are counted as liabilities because they will one day return to their owners)—raising the unwelcome possibility that regulators will force them to add more capital to their balance sheets.”

How is the current market and capital requirements affecting your institution? What would you do differently? Do you think the U.S. is headed for a double-dip recession? Leave us a comment below.

Bank of America, Wells Fargo and JPMorgan Start Payments Service

Research shows that customer’s payment preferences are moving to online and mobile channels. Financial institutions have to engage customers on their terms, in order to meet the changing customer landscape.
Three of the U.S.’s top banks declared their strategy Wednesday. What’s yours?