As with any highly skilled job, learned knowledge and practical applications represent two entirely different aspects of experience. This is particularly relevant for bank lenders, as much of their talent will be derived from real-world experience as opposed to financial theory and lending criteria. However, one of the most pronounced problems is the simple fact that mentoring can prove both difficult and time consuming while on the job. This will normally result in one of two scenarios.
The first situation relates to the cost of the training period itself. On the job mentoring can be temporally laborious; that is, during this period there will be little money made and few loans given. This is less of a problem for the new employee as it is for the senior staff, for it is obviously difficult for them to generate new business while mentoring new staff. As a result, potential opportunities may be lost.
The second and more damaging scenario is associated with a new employee who has not been properly trained. Perhaps little mentoring took place or any help that was given failed to address the rather intuitive approach that lender must develop. Irrespective of the reason, lenders may unwittingly approve a high-risk loan. Should a client that poses a significant chance of default be given a loan and that client fail to repay, a loan for a few thousand sterling may eventually cost the bank ten times this amount. Furthermore, the lenders themselves may learn very little from the overall negative experience; save for perhaps being overly cautious and approving very few potential clientele.
Thus, mentoring in the financial sector needs to be properly addressed, but with the correct approach. Third party companies are often used that will provide valuable insight through hands-on simulations and other real-time methodologies. Lenders need to be educated as to the context behind this financial process while developing the skill set to ask the right questions and understand the financial figures’ relation to each specific case. This approach will allow senior staff to focus solely on high net worth customers and will also help prevent a potentially costly mistakes on the part of the lender.
In these days of regulatory adjustment and financial stringency, a good deal of attention has been focused on lending policies, and rightfully so. Implementing a third party mentor can provide both the clarity an insight necessary for a lender to approach his or her job with alacrity and expertise.
Tim Aldiss writes for Omega Performance – the place to go for credit training.