The Last Samurai is a 2003 epic period action-drama film starring Tom Cruise and Ken Watanabe. The movie, which takes place in the late 1800s, is about the last group of Samurai who are rebelling against the new emperor of Japan who is trying to modernize Japan and destroy the Samurai’s place in society. Tom Cruise plays the role of an American soldier hired to help the Emperor’s forces defeat the Samurai but gets captured and becomes intrigued by the ways of the Samurai. The obvious connection to modern-day lending is the old school, credit trained ABL lenders fighting for their rightful place in lending. To avoid doubt, this is not age-related versus style, culture and background. The generation of BDOs trained twenty plus years ago is simply a dwindling breed of BDO that should be savored. Today, there are significantly fewer credit trained BDOs than there were twenty years ago, and this trend is going to continue. The BDO role and function will continue to evolve over the next decade as commercial banking groups take over ABL sales, training programs are reduced or eliminated, and non-banks continue to consolidate.

Fewer BDOs will be needed and even fewer will have the same training as the Samurai BDOs. Twenty years ago, the number of strong, credit trained BDOs was plentiful and ripe for the picking for both banks and at that time, the emerging non-bank sector. Today fewer true credit trained BDOs exist than there were 20 years ago and even ten years ago. There are several reasons for this including: bank-ABL becoming a product instead of a business, the elimination or shrinking of training programs to cut costs and non-banks being able to operate with just a few regional BDOs of which most were cherry picked from banks. Go back twenty years in time and think about how many strong credit training programs existed not just for ABL, but for banking. Now just a handful of credit training programs still exist and almost none for ABL. It’s no surprise ABL has a recruiting problem, and this can be directly traced back to the lack of training programs and metamorphosis within banks to make ABL a product.

Bank credit training programs are largely a thing of the past except at the nation’s largest banks. These “rotation programs” were rigorous, hard to get into, and even harder to succeed in, but they trained a large number of credit professionals who would go on to become underwriters, portfolio managers and business development professionals, among other roles. The path to becoming a BDO began with the training program followed by a stop in collateral examinations, underwriting and/or portfolio before being given an opportunity to “learn the ropes” from a senior BDO. The combination of training and on-the-job apprenticeship from proven relationship-oriented executives created a strong field of sales executives who had authority or at least the confidence to give their word to potential clients. What led to the change is fairly straightforward, consolidation that led to ABL becoming a bank product and fewer experienced BDOs needed at non-banks.

The combination of long-term trends, most notably commercial banks integrating ABL into the fold, and having their massive commercial banking sales teams sell the ABL product is where we are today. This change clearly eliminated the need for separate sales forces – bank-cash flow and bank-ABL calling the same prospect or sponsor or competing against each other. One sales force can manage relationships and provide two proposals for a client if it calls for it. The long overdue transition to ABL as a product at most banks simply reduced the number of BDOs required. Reducing the number of credit trained BDOs graduating from a bank program reduces the number of potential job applicants to join non-banks, which creates an overall industry dearth of talent. The confluence of ABL becoming a product, fewer credit-training programs and consolidation has clearly led to fewer strong applicants and fewer spots to fill.

The BDOs trained twenty plus years ago were trained when ABL was its own business and were given wider-reaching authority than most have today. The role is different now and the product has evolved to a new degree of risk-taking and commoditization. The new crop of BDOs is different in both style, credit training, and views of the ABL market. Younger BDOs are learning the ropes in a new era of consolidation and commoditization. Many younger BDOs are required to learn on the job without much oversight and apprenticeship time or credit background experience to leg into. They have been promoted or given the chance to become a BDO and thrown straight into the field with a limited referral network. Try starting your first sales job selling a sophisticated credit product with limited sales experience and facing grizzled veterans. It’s a true testament to whether new entrants have the entrepreneurial spirit to succeed. The new ones succeeding are quick on their feet, crafty and very competitive – ironically much like the Samurai who came before them when the industry was nascent, and it was truly hand-to-hand combat in the days of Foothill, GE and CIT to win clients.

The end of the movie is seminal as Tom Cruise now leads the Samurai into a rebellion against the Emperor’s army. The battle-tested Samurai lure the army into a trap and force the Imperial army to retreat. Knowing that Imperial reinforcements are on the way, the Samurai break through battle lines before being stopped by superior weaponry. Recognizing the extreme bravery of the Samurai, the Imperial army commander orders a stop to the fighting. Right now, we are entering into a seminal time in ABL lending with a generational transition of leadership coming, massive transition of both bank and non-bank industries, and of course a new generation of BDOs. While ABL is evolving in both bank and non-bank worlds, we cannot forget its own culture and history of Samurai BDOs who built the industry. We should all remember the traditions of The Last Samurai in ABL. We are all going to long for the good ole days soon enough as ABL continues to commoditize.