Vivianne Arnold is a founder and director at Franklin Phillips, an Asia Pacific executive search, professional development, and strategy consulting firm serving clients in trade finance, banking, financial services, import/export, IT and telecoms.
Australia’s success as a trading nation is vitally dependent on the expertise of trade financiers and the quality of their products and services. But we’re fast running out of top talent as executives near retirement age.
Franklin Phillips has just concluded the first round of our Trade Finance Talent Index (TFTI) with financial market research firm East & Partners. The index will be a regular look at trade finance staff levels across domestic and global banks.
Already, banks are reporting difficulties in recruiting suitable trade finance experts, and with the headcount forecast to grow by 26.6% over the next 12 months those difficulties are only likely to become more acute. At regional banks, the index shows that headcounts are expected to grow by 40% over the next 12 months.
Where all these new trade financiers are going to come from is unclear. Poaching from each other will only go so far, and the top trade finance leaders are not getting any younger.
At the Big Four, for example, the average age of the executive team is 53. Anecdotally, some of these leaders – stalwarts of the discipline for several decades – are hoping to move into retirement relatively soon.
Those stalwarts began their careers learning the stock-in-trade of trade in the back office, but that traditional training ground has been offshored or centralised. The banks need a robust, independent, certified, Asia Pacific focussed professional development program for trade finance and structured trade.
Asia Pacific knowledge is vital to the new trade finance executive. The Big Four and most of the multinational Australian based trade finance teams have direct or dotted reporting lines to Asia, and they, along with their clients, are looking to Asia for growth.
Australian teams may need to look to Asia to help fill the coming Australian trade finance talent gap.
For the banks, trade is a highly profitable business and delivers significant benefits to other areas of the bank. Trade finance requires less capital for revenue than other products and brings in revenue in foreign exchange, cross border payment fees, and other transactional banking, and dramatically increases cross-sell.
Not only that, but it makes the whole banking relationship even “stickier.” According to East, primary trade finance customers are 68 percent less likely to “churn” their banking relationship than on other products or relationship areas.
Sadly, within the banks, trade finance has the reputation as an old, paper heavy and complex area of the bank and in recent years has failed to attract banking’s best and brightest.
This needs to change, and change soon. We need to rebrand trade finance as the sexy, dynamic, international and profitable discipline. We need to look beyond poaching, look to Asia, and provide a professional development solution.
Otherwise, Australia will have a broken pipeline of trade finance talent, and that will be to everybody’s detriment.
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