Succession as a Strategic Risk Management Tool
The U.S. banking industry is entering a critical phase — facing a wave of retirements while competing fiercely for top talent in risk, compliance, and technology roles. As outlined in the Travillian Next article 2025 Blueprint: Will Your Bank Keep Up?, early signs point to a “hot and competitive” talent market, with banks under pressure to bulk up succession planning, retention, and leadership development across all key executive ranks. For community- and regional-bank boards, the absence of a strong C-suite successor framework isn’t just a governance lapse; it’s an existential risk.
The Gaps Are Real — and Growing
Bank Director reports that only 18 percent of bank boards have a defined CEO successor with a clear timeline. Community banks, the publication notes, face specific hurdles, including:
- A limited talent pool
- Rising compensation pressures
- The challenge of preserving culture during leadership transitions
Meanwhile, McKinsey warns of a broader financial services pipeline crisis, projecting a shortage of up to 110,000 financial advisors by 2034, driven by slow growth in advisor ranks and rising retirements. While not specific to banks, the lesson is clear: succession gaps are growing across financial services.
Brian Love, Head of Banking and Fintech at Travillian, sees the challenge playing out across the executive suite. “From Travillian’s lens over the industry, we’ve seen turnover occurring in just about every C-Suite role,” he notes. “Our largest pocket of search work has been the CFO seat — exacerbated by shifts in economic trends that trickle down into new, necessary skill sets — with a close second being CEO/President and Technology leadership. In all three categories, the talent pools have shrunk, so banks must stay nimble in their recruitment processes and expand their horizons, sometimes literally, by allowing talent to physically work from alternative locations or in a hybrid manner.”
How Banks Are Responding to the Talent Crisis
Across the globe, big banks are putting succession in the spotlight. JPMorgan’s Jamie Dimon, for example, emphasized succession planning as “top of mind” in a Business Insider interview. Reuters reports that BNP Paribas investors are worried about the lack of clear internal successors. And in Australia, Commonwealth Bank CEO Matt Comyn has been reshuffling executives to test potential future leaders, a selection strategy chronicled by The Australian.
Yet, when it comes to U.S. community banks, Love cautions that progress has been limited. “Less than 20 percent of all community banks have a succession plan in place that includes an identified successor and a timeline for the CEO role,” he says. “That’s not good, and I don’t think there has been much movement, even with regulators asking for better plans and industry talking heads like me warning about the dangers of not preparing ahead and avoiding leadership crises.”
5 Strategies to Build Your Bank’s Leadership Pipeline
For banks seeking practical steps to strengthen succession and build a leadership pipeline, several strategies stand out:
- Map skills and successors. Use talent assessments and role-specific competency mapping to identify gaps, an advisement credited to FPS Gold’s blog.
- Invest in coaching and mentorship. Bank Director reports that 73 percent of banks plan to expand coaching, and 53 percent plan to fund external career development.
- Look outside the industry. With only 22 percent of banks hiring externally (a Bank Director-sourced stat), institutions risk recycling the same limited talent. Recruiting from adjacent industries can expand the pool.
- Use data-driven HR. McKinsey recommends automation and analytics — such as attrition heatmaps — to anticipate talent gaps.
- Treat succession as risk management. As noted by the Federal Reserve’s Community Banking Connections, strong succession planning is a buffer against operational disruption.
Love agrees that looking outside the industry is an option, but with caveats. “Community banks under $20 billion like the idea of hiring progressive talents from the tech world,” he notes, “but oftentimes those transplants are rejected due to cultural fit and compensation demands. The key is finding a tech mind who has also experienced a heavily regulated and bureaucratic industry like community banking.”
Advice for the Next Generation of Bankers
As banks wrestle with both leadership gaps and cultural considerations, the next wave of bankers is beginning to chart its course. Love urged aspiring leaders to take ownership of their development. “Say yes to everything: new projects, new initiatives, new business lines — even if they’re just ‘what if’ scenarios,” he advises. “Ask to spend time in other departments. Be known to other divisions and their people. Be positive and be an ambassador to your culture. Be curious. Embrace technology and automation. Try to take work off your manager’s plate. That’s what makes you unreplaceable.”
The Time to Build the Bench Is Now
Talent shortages and weak succession frameworks are not future problems — they’re here today. As community and regional banks navigate tighter regulation and technological disruption, leadership continuity has become a strategic imperative.
By mapping competencies, investing in mentorship, expanding the recruiting pool, and treating succession as risk management, banks can turn a looming talent crisis into a competitive edge. And as Love emphasized, the best way to avoid disruption is to start planning now — while building a new generation of leaders ready to step into the void.
