Banking: Still a top priority in a fast-changing world

Once upon a time in a foreign country called “the past”, before credit squeezes, dotcom busts and hedge fund collapses, JPMorgan, the investment bank, would every year send its new graduate trainees from around the world on a six-week financial training programme in New York.

I know this is not a myth because I was there in 1998 – we had six weeks of intensive work and a moderate amount of play and it must have cost somebody a fortune. I had not been keeping track but I had assumed that the New York trip had been scrapped in favour of something cheaper: I was wrong.

James Bland, global head of training and development at the bank, says the global programme is “always looked at in these times” but senior management remains very committed to it. What is more, these days the new graduates also have follow-up training from their local business unit. The bank calls these sessions “boot camps”. Mr Bland says there are no plans to exchange the JPMorgan global programme for local options. However, Donald Ross, sales director of Kaplan Financial, a large financial training provider in the UK and Asia, says many City of London companies he works with are now looking for “a similar look and feel globally, but with local delivery”.

For these clients, he says, it is also very important that an understanding of diversity is conveyed through training courses; in particular they want employees to be more aware of cultural nuances across the globe and to be less Europe, US or Asia-centric.

In light of recent market and economic travails and the possibility of worse to come, Mr Ross has noticed another clear trend: the popularity of the company’s daytime training courses is on the wane while the numbers enrolling for evening and weekend options have jumped. He thinks this must be because people are feeling less secure in their jobs and are more apprehensive about being absent from their desks.

One thing that does not seem to have happened in response to the subprime crisis, in which poor understanding of complex financial products was an important factor, is a sudden rush in demand for specialised training in this area.

Steve Kaplan, professor of entrepreneurship and finance at the University of Chicago Graduate School of Business, says this is as it should be because understanding what went wrong is a matter of economic fundamentals. He uses the snappy acronym CFIMITYM – cashflow is more important than your mother – and points out that the subprime market crashed and burned because investors had bought something that had “less cashflow than they thought there was”.

“We can give you a lot of tools [in financial training courses] but your assumptions and judgments matter most,” says Prof Kaplan. His colleague John Heaton, also a professor of finance at Chicago, tends to agree. He says that, as far as he can tell, companies that come to Chicago for financial education are not looking for anything new.

As for the school, it does not “teach the latest and greatest fad” but feels it is more important to give a thorough understanding of the essentials of economics and finance, for both entry – and higher-level financial training.

Prof Heaton talks about hedge funds as an example, saying there has certainly been more desire for training in this area in recent years. However, he notes that Chicago does not teach how to build a hedge fund but rather how to look at a fund and try to establish its risk exposure and real return.

Aside from an understandably heightened interest in assessing risk – indeed Mr Ross’s colleague Elizabeth Hess, director of communications at Kaplan, says “the risk side of the business is going through the roof” – there seem to be no great financial training subject fads in evidence at the moment.

As for delivering the subject matter, Mr Ross points out that the use of technology increases every year.

He notes that banks do not want just “chalk and talk” but also simulations, interactive content and progress testing.

Mr Bland at JPMorgan notes that the simulation side is particularly important for graduate trainees who will be involved in sales or trading of financial products. Along with Mr Ross he says there is more use of e-learning than there once was for all types of training at the bank.

But Mr Bland also points out that some subject areas will always be more amenable to face-to-face training, in particular “softer” interpersonal skills such as negotiation. He says he is conscious that training “requires a level of discipline” and it can work better if you can get someone away from the “desk, site and BlackBerry”.