A lack of investment in people at the early stages of their careers could mean that the trade finance industry is not able to evolve in the same way as the rest of the world of trade, running the risk of becoming irrelevant in the eyes of its customers.
Despite the best efforts of industry bodies to attract and nurture the next generation of trade finance professionals, more work needs to be done to increase the proportion and visibility of young talent in the business, which will ultimately drive its future growth.
Even before the Covid-19 pandemic brought the threat of hiring freezes and job cuts, the trade finance industry had been warned about the looming trade finance generation and knowledge gap, as reported by GTR back in 2017.
“The trade finance world is a mature sector, and therefore you deal with quite a lot of people that have been around for a long time. Eventually, at some point, they’re going to leave, and so we’re now edging towards there being a danger of a skills gap,” Johanna Wissing, then-chair of the International Trade and Forfaiting Association’s (ITFA’s) young professionals (now emerging leaders) committee, told GTR at the time.
She explained that people working in trade finance tend to grow organically within the sector “because it’s a very enjoyable space to be in”, which has meant that there has been very little room for new entrants.
Unlike in other areas of finance, such as investment banking, where people tend to move around and cover different desks, most heads of trade finance are industry veterans, often holding onto their roles for decades. Recent retirees from the business include Michael Quinn, who left JP Morgan a few months ago after having spent 40 years in banking, more than half of which had been in the trade finance sector, and John MacNamara, who set up Deutsche Bank’s structured commodity trade finance desk in 1999, and departed from the bank in 2019.
Despite trade finance institutions having known for some time that they can do better to attract more young talent into the sector, anecdotally at least, not much progress appears to have been made.
According to Lee Jackson, managing director at City Elite Recruitment, which specialises in banking and financial services, including trade and commodity finance, across the Emea region, many of the banks that he works with report seeing the same candidates coming through year after year.
“That’s because, with regards to junior positions within trade, there really doesn’t seem to be enough new talent coming in,” he tells GTR, adding that the number of banks that actively seek to hire graduates on an annual basis are “few and far between”.
“Nine times out of 10 they’re going to want a minimum of three years, and usually five to six years, of experience,” says Jackson. “That’s all well and good, but there’s going to come a stage in five, six years’ time when there aren’t going to be these people with that kind of experience because they’re not bringing them through now.”
If more banks are indeed taking on graduates in trade finance, they’re not doing enough to promote it, he says.
Awareness of opportunities
The problem is compounded by the fact that even if those opportunities were being made available, the lack of awareness of the sector within universities means that graduates tend not to even consider trade finance as a career option.
Young people working in trade finance today often speak about how they chanced upon the sector quite by accident and did not necessarily set out with an intention to work in the industry. Some of them were involved in larger banks’ graduate programmes that include trade finance as a rotation and were then placed into their roles.
“There’s not enough information about trade finance out there for school leavers, undergraduates and graduates,” says Aarti Patel, chair of the ITFA emerging leaders committee, who has been working in trade finance since 2012, having started her career in management accounting before pursuing an interest in trade finance while working at a bank. “I also think that universities are not doing much teaching in this area,” she says.
Patel believes that the trade finance industry has a duty to alert schools, universities and graduates to the fact that the sector presents a viable career path.
For its part, over the last two years, ITFA has been partnering with the University of London’s Cass Business School to teach an elective specialist trade finance course as part of the Cass MSc curriculum. The 2020 course is being delivered online by ITFA’s emerging leaders committee.
The committee’s wider goal is to make trade finance attractive and accessible as a career choice to existing and aspiring young professionals. It seeks to do so by increasing the proportion and visibility of emerging leaders, boosting the level of specialist knowledge and networking opportunities for young industry professionals, and dialling up the responsiveness level of the industry to the needs and aspirations of emerging leaders. The committee aims to do this “not by imposing an agenda driven by the senior members of the industry but rather by listening to what the emerging leaders want and need”, as stated on the ITFA website.
Other industry bodies have similar initiatives with comparable goals: the Bankers Association for Finance and Trade (Baft) set up its future leaders programme in 2015 and, according to its website, the International Chamber of Commerce (ICC) UK has a young finance forum within its UK rising star programme, launched in 2017.
Although some of these organisations are making good progress in their individual endeavours, there are some who believe that a more joined-up, industry-wide approach might reap greater rewards.
“There needs to be a more solid introduction to the career opportunities in trade finance to build a strong pipeline of real talent, and retain it. It needs to be proactive because if you’re just reacting you’re not going to win over the brightest stars of the next generation, as they will find more attractive opportunities elsewhere,” says Roberto Leva, trade and supply chain finance relationship manager at the Asian Development Bank (ADB), who has been working in trade finance since 2011. “The industry bodies need to come together to have a discussion with the educational bodies,” he says. “Trade finance has always been considered as something that you ‘learn on the job’ but I think it would be interesting to structure a course with a strong reputation – something like a CFA for trade, that would really stand out. Of course you can do some online certificates, but there are so many at the moment, and they are often disconnected and with limited industry recognition.”
If the model works with Cass, says Leva, why not partner with other trade finance bodies to engage with more universities globally and make it part of the formal curriculum – or even a new qualification.
“The curriculum could include fields with potential strong synergies with trade finance, such as trade negotiations, customs practices or shipping and logistics, and work in collaboration with export credit agencies. This would create a talent pipeline with strong transferrable skills across trade industries, which would lead to more innovation and co-ordination in the future, as well as allowing candidates a broader choice of options at graduation, which is often an important variable in choosing a profession,” he says.
Enough jobs to go around?
Should industry endeavours gain traction and more graduates seek out a career in trade finance, the question remains whether there are enough jobs in the industry to satisfy any increase in demand. It’s one that divides industry players.
According to one 25-year veteran of trade finance who spoke to GTR on condition of anonymity, it’s a difficult time to try to enter the trade finance market because changes within the industry have meant that many doors to newcomers have been shut, and traditional routes to the top diverted.
“There used to be many different jobs around trade finance – quite a lot of people started out in operations or middle office roles. But many of those roles have been offshored or have gone altogether with the drive to digitalisation,” they say. “Even those doors that do open in an operational role in trade finance tend not to lead on to a front office position these days: they seem to be very segregated from front office and structuring roles.”
Less senior industry players – and those who have been in the trade finance job-seeking market relatively recently – tend to disagree with this view.
“Certainly jobs in the industry are limited, but I don’t see a particular bottleneck in trade finance compared to other lines of business, and good opportunities are still available for the right candidates,” says Leva. “I’m not saying it’s not tough, as it definitely is, but it is so in most interesting businesses and I can confirm it remains so at all levels,” he adds, describing the fierce competition he faced to secure his current position at ADB – despite having previously worked at JP Morgan for 11 years, beginning in the graduate programme and leaving at the level of executive director, and being part of the ICC’s executive committee. “It’s tough but it’s worth it,” he says.
Patel too has a more positive outlook. “There are jobs out there,” she says, although notes that a number of available positions are not at banks but with fintech or alternative finance companies, where she says there is a demand for skills in supply chain finance techniques and ESG principles, as well as the ability to think creatively and come up with innovative solutions.
“Over the last few years there has been a big trend where ex-bankers are moving to alternative providers and fintechs, especially amongst youngsters but also with more experienced professionals,” she says, making the point that if traditional players don’t shake themselves up, they will ultimately lose out on this pool of talent.
Patel explains that one of the chief aims of the ITFA emerging leaders committee is to ensure that member organisations know that there is talent out there. “It’s all about creating awareness,” she says.
“I often learn about people starting in new positions, but never hear that the companies they’re joining are hiring. So it could be that the positions are not being advertised. Or it could be that in trade it’s all about who you know and what contacts you have.”
As the chair of the committee, Patel feels that it is her duty to help people reach their goals in expanding their trade finance knowledge and to help find opportunities within the industry, which she says she has done “a few times now”. “But we probably need to do more,” she adds.
Overcoming old school mentality
One of the issues that young trade financiers reportedly have to contend with when trying to grow their careers in the industry is being overlooked for positions because of their lack of experience – which often equates to age – in the field.
“For a while it’s been ‘do you take a chance on a youngster, or do you go for proven talent?’” says GTR’s source. It’s a predicament that’s been a source of much deliberation during various hiring rounds throughout their career. “I’ve always personally brought graduates through and tried to give young talent opportunities – it’s been one of the most rewarding parts of my job to see youngsters grow as individuals. But I’ve also lost a lot of young talent, because people have seen me train them up, know they’ve had a good grounding in the business, and then poached them for bigger and better jobs that pay much more – because that’s what tends to happen when you grow externally rather than organically through the same organisation.”
Then it comes down to deciding whether to hire another graduate to replace the person that has been snapped up – and start the process from scratch – or to fill the gap with somebody that already has the necessary experience. “It’s a bit of a double-edged sword,” they say.
Nevertheless, this fear of losing bright young talent is promulgating an ‘old school’ mentality that sees many organisations denying their young recruits the very opportunities that they’re actively seeking, and which help to foster the transfer of knowledge between generations.
“There is a problem in some organisations,” says Patel. “They don’t let youngsters go to certain events and networking sessions because they’re worried that maybe you’re going to get more deals in, or get a career opportunity from it.”
“The thing is, they should be proud to have someone that is a good employee. That’s why – once the Covid-19 threat has passed – it’s really important for ITFA’s emerging leaders to continue to host regular networking sessions to share ideas and issues. It’s usually the more senior people that get to go to all the industry conferences and networking drinks, although I was lucky enough to be given the opportunity as a youngster to attend such events, which allowed me to build my network.”
She adds that it’s also managers’ and organisations’ duty to empower youngsters and newcomers to the market. “Managers are the key to helping develop and nurture talent,” she says.
Duarte Pedreira, ITFA board member and head of emerging leaders, believes that initiatives like ITFA’s are necessary to drive the participation and representation of the next generation of trade financiers, who are poised to transform and future-proof the market. “Nowadays it’s all about impact and making a stand. The new generation is made of some really clued-up people; people who stand for something: they want to be seen, they want to be known, and they want to contribute,” he tells GTR.
The rate at which the industry is evolving thanks to increased efforts to digitalise and calls to be more representative may necessitate that this new wave of trade financiers makes its way to the top sooner rather than later.
“The situation does lend itself to moving away from the grey-haired, grey-suited trade financier towards a more agile, and possibly more energised, younger, mindset,” says GTR’s source.
Indeed, the trade finance market may be at a crossroads as it looks to achieve this balance, they say.
“There’s a wealth of people with 25, 35 years of experience in trade finance. But is that experience really relevant as the industry moves into a new era? I think the answer is yes. But it has to be complemented, and that’s the silver lining for younger talent. We need to give youngsters coming into the market with a fresh view of what trade finance looks like a chance to grow and bring new ideas.”