Graduates are not immune to this trend. Banks used to provide a plentiful supply of vacancies, which led to comfortable and steady positions in middle management. For the student expecting a reasonable but not exceptional degree, retail banking was a safe bet. It did not have the glamour of stockbroking or merchant banking, but it was less competitive and the jobs were secure.
Banks have aligned their graduate recruitment policies with their overall staffing requirements. "Milk round" vacancies numbering in the hundreds have given way to smaller, far more selective training schemes. Programmes now take between 50 and 80 graduates, depending on the bank.
They are looking for a different type of graduate, too. The industry has moved to flatter management structures, and middle grades have been cut substantially. The trend away from high-street branches towards service centres (where back-room processing takes place in large facilities, usually on out-of-town industrial estates) and to telephone and electronic banking means that graduate recruitment focuses less on branch management and more on specialisms such as mortgages or (plastic) cards, or head office functions.
This means recruiters can be far more selective about who they take on. Most now ask for an upper second class degree, as well as a strong CV with evidence of leadership and extra-curricular interests. There is also a growing demand for postgraduates, especially those with masters' qualifications in subjects such as economics.
NatWest's recruitment policy is typical of this trend. The bank found it was taking on more graduates than it could develop into senior managers. "Our strategy is now to take on a smaller number of higher-quality individuals," explains Lisa Lilley, a graduate recruitment manager. "They will go through a very intensive training programme that takes them through to junior management at an early stage."
A NatWest graduate can expect to take up a management position after six months. "We are looking for high achievers who have the desire and ability to move rapidly through the organisation," Ms Lilley says.
A similar policy operates at the Royal Bank of Scotland, where the graduate recruitment programme has also been restructured. "We have become an organisation of specialists and professionals," says Muriel Ross, graduate recruitment manager.
At the RBS, recruits are expected to develop an individual specialism - whether in credit management, corporate banking or trading in the Treasury section - before acquiring wider management skills. Progression is the individual's responsibility. Anyone can apply to advertised internal vacancies, and it is up to graduates to put themselves forward.
An exception to this trend away from placing graduates in the branches is the Midland Bank. The HSBC Group, which owns the Midland, believes it is important for new recruits to spend time in retail banking, as it is still at the core of the company's business.
The Midland Executive Trainee Programme, which lasts two years, starts with a 10-week training course that includes students from across HSBC. Midland graduates then spend six months in a branch. This is followed by a second six-month placement. Specialisation comes only in the second year. After the programme, a graduate's first management appointment is usually in a retail branch.
"The consumer banking market and the retail branch network is a core part of commercial banking for us," says Mike Killingley, senior manager/executive education, at Midland.
"Within the first year, graduates may move into different areas, but we believe they should have an insight into consumer banking. Even if they move into corporate banking or client services, their clients will still have retail accounts," Mr Killingley adds. "It is important to be able to see the customer's point of view."
Like the other banks, Midland is looking for a smaller number of better recruits. In order to do this, the bank has moved to year-round recruitment. "We don't just want people in September and October," Mr Killingley says. "A lot of finalists are deferring their career search into the summer."
Banks are also becoming more flexible in the type of graduates they hire. As well as higher degrees, experience in another field, either before or after university, is increasingly valuable in the sector.
James Cady, aged 30, is one of the new breed of banking recruits. He has just completed NatWest's training programme and has joined the banking services section in NatWest's Nottingham corporate banking unit.
Mr Cady graduated in 1988 with a degree in geology. After that, he worked as a chartered geologist in the construction industry. Joining NatWest was a career change.
"I felt I had a lot of useful skills, and I was looking for a niche where I could use them," he says. "The banks want to bring in people with industrial experience and train them in financial skills."
Alongside his day-to-day work, Mr Cady is on call to offer specialist advice to clients on construction, pollution and contaminated land.
Half of the students on Mr Cady's course had worked before joining NatWest. He has no doubt that the sector has become more open to applicants who are not straight out of college. "Banks are going for a mix of people from college and those with experience," he says. "Had I applied three or four years ago, it would have been a no."Reuse content