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Going on a DIET To Learn Credit Skills


April 9, 2015 | by Tom Carlin, President, The Financial Training Group



It has been my experience in teaching credit to branch and retail lenders that technical skills don’t enable the sales conversation.



I recently heard a familiar lament from the head of branch banking at a major regional bank. "I am at my wits end. My people can’t seem to hold a basic conversation about financial issues with customers and prospects even after I put them through an e-learning credit training program. They don’t seem capable applying what they learned. What can I do?"


It has been my experience in teaching credit to branch and retail lenders that technical skills don’t enable the sales conversation. Most classroom and e-learning credit training programs attempt to do too much. Tons of technical information often overwhelms participants who don’t know what is important. What they learn needs to be linked to the conversations they have with clients and prospects. Isn’t the bottom line asking the right questions to uncover needs? How can management help?


First and foremost senior management should look at the e-learning program. “E-learning is so boring!!!. I have a hard time staying awake.” That is the complaint heard most often from participants about e-learning. Technical concepts can be extremely dull to learn. Fortunately, there are ways to spice up a program and keep participants engaged. Make sure the program is well designed with games, case studies or mini quizzes so the participants get to practice the skills they are learning. The e-learning should be designed in such a way, that participants can bookmark where they left off and tackle it in small chunks. Also the program should be designed in such a way that they clearly see the practical application in their day to day interaction with customers. This will help to keep them interested.


The question now becomes how to monitor their progress. Most e-learning programs come equipped with software called a Learning Management System (LMS). In addition, some financial institutions have established their own LMS system. These software programs are very sophisticated. Students are somewhat surprised by how much information they can provide.


One large client that implement our consumer lending e-learning program experienced the following. One student who got a poor grade on the final assessment sent an email to senior management with the following comment, “this e-learning is not very good. The assessment at the end is far too difficult and does not really cover the concepts taught in the course”. To put his comments in context, each module in the e-learning takes approximately 1 hour to complete. It turns out the LMS software showed that this student spent approximately 8 minutes on each module, quickly clicking through each screen. He then took the assessment at the end. Of course, he did not do well. The bank let the student know they had a record of how much time he spent on each module. They never heard a peep from him again.


An LMS system can also tabulate assessment results which show the questions a participant got right or wrong. Human Resources can then use the reports to monitor progress. If a student is not doing the work a reminder email can let them know their progress is being monitored. They do need to know big brother/sister is watching.


If there is an assessment at the completion of the module, let them know in advance the grade that is expected to qualify as passing the course. Let them know a less than passing grade will require them to go through the material a second time.


Now that you have addressed the technical aspects, how do you cut down or reduce training dollars spent on classroom training by using e-learning effectively? The answer is a 4 step DIET to successfully implement an e-learning credit training program for branch bankers and retail lenders.



Define the skill set – Management needs to be clear on the skills they want participants to learn and demonstrate on the job. Breaking the required skills into small pieces is critical for both training deployment and learning retention.


In my experience there are a two different levels of credit skills required of bankers; first a banker needs to know enough about financial issues that they are comfortable talking to customers about their business and don’t get lost in the conversation or intimidated by the conversation. In a good e-learning credit training program they learn to ask the right questions to uncover financial needs.


The second deeper level entails more sophisticated knowledge to pull apart the information from the financial statements and tax returns to make a credit decision and perhaps negotiate terms with the customer.


Most e-learning credit training programs teach to the second level. This can often overwhelm a novice.


Let’s begin by specifying the first level of financial skills branch bankers and retail bankers need to be successful.


Accounting – Most branch bankers and retail lenders have had an accounting class in the past. Do they really need to go through debits and credits, again? The answer is no. What is really important is understanding the difference between cash and accrual accounting, how the income statement and balance sheet connect through retained earnings and the difference between compiled, reviewed and audited statements.


Industry and Business risk – They need to know some basic differences between wholesalers, retailers, manufacturers and service companies to feel comfortable talking to a business owner about their business strategy and future plans


Corporate Structure – They need to understand some basics on corporate structure to see how cash flows from the customer’s business to them personally. This will give them the confidence to start asking the right questions about business and personal cash flows.


Financial Statement Analysis - They don’t need to know every single financial ratio to get into a meaningful conversation with the customer about their financial statements. A thorough grounding in six ratios that drive cash flow will enable them to have very good conversations with their customers: sales growth, gross profit margin, operating profit margin, accounts receivable days, inventory days and accounts payable days.


Cash flow analysis in the beginning should probably be limited to the debt service coverage ratio and how to read a cash flow statement.


Loan structuring should be limited to understanding the asset conversion cycle, why businesses borrow short term and long term and the loan products the bank has to meet those needs.


Commercial real estate should be limited to basic information about the cash flows and structuring options for owner occupied vs developer real estate loans.


That’s it.


More sophisticated training in financial statement analysis, cash flow analysis, tax returns, loan structuring and real estate risks will come after they have used the basic skills for some time.


Implementation – There is a right way and a wrong way to implement an e-learning program. The wrong way is to tell your group that they will have to participate in an e-learning credit training program that the bank has purchased or created without:


  1. Letting them know the skills they will be learning in the program
  2. Specifying how they will use the skills in the field
  3. Stating the time commitment to complete the program
  4. Defining the bank’s expectation about how well they do


The right way is to have senior management work with Human Resources to craft the right messages about the bank’s goals, to explain the skills they will be learning in the training and how acquisition of these skills will contribute to their future success. They also need to let participants know if there will be an assessment and the banks expectation about their performance. Finally they need to know of any additional training that will follow the e-learning.


Expectation setting – participants need a goal. It should be clearly defined upfront how much time they will have to complete the program. They should have enough time to go through the training but not too much time. On the other hand, pushing participants to complete the program too quickly will lead to resentment. Optimally, participants should be given some time during work to complete the program. If participants are expected to complete the program outside normal working hours allow them one week to complete each hour of the e-learning. That way a participant could spend 15 minutes each day at lunch and easily finish within the established timeframe.


Training - The best option for follow up on technical training is to practice and refine the skills in a classroom setting. Classroom training should enhance, not replicate, the e-learning. Realistic case studies and role-plays enable participants to practice the skills they learned. Some organizations may have unworkable logistical considerations or simply lack the training dollars to do follow-up classroom training. In those circumstances, at a minimum, the follow up should be a webinar, virtual meeting or discussion board where participants can share ideas and ask follow up questions.


Given that most organizations are trying to cut the fat out of training budgets, a proper DIET will enhance the learning experience, cut costs by reducing classroom hours, and give participants the confidence to talk to customers and prospects about their financial needs.



An authority on credit risk, Mr. Carlin is President of the Financial Training Group and Managing Partner in their E-learning subsidiary Eensight. He has worked with major banks over the last twenty years, designing and teaching credit related topics including: consumer lending, business lending for branch bankers, accounting for bankers, financial statement analysis, cash flow analysis and loan structuring. His audiences include business bankers, branch lenders, recent graduates going through the organizations basic credit training program and middle market lenders with many years of experience. Each program he designs and teaches is tailored to the individual customer with the products, procedures and culture of the organization incorporated into the course design. The complexity and intensity of the programs are adjusted to reflect the needs of the participants and the logistical training issues faced by the organization.


He has designed programs in credit analysis for Citibank, Wells Fargo, Capital One, Chase Manhattan Bank, First Tennessee, M & T, Union Bank, and The Bank of China. As Managing Partner in Eensight, he has designed e-learning programs for banks such as US Bancorp and the Bank of Colorado.


Prior to establishing The Financial Training Group, Mr. Carlin was a Regional Director for Omega Performance Corporation.


He was also a Vice President with Bankers Trust in New York. He was responsible for marketing credit and trade finance products to corporate clients and correspondent banks worldwide.


Mr. Carlin has a Masters of International Management degree from The Thunderbird School of Global Management and a Bachelor of Arts Degree from Villanova University.


Contact Tom at 914-834-4555 or by email at