Old Style Banking

Longing For The Days Of Old Style Banking!

After watching the program Bank Of Dave On Channel 4 tonight it’s got me to thinking, could we ever return to the good old days of responsible banking?

I’m talking about the days when bank managers based their lending decisions not on credit scores but on personal relationships with customers, customers they’ve known for years! The days when you knew your savings were being invested in local people and you trusted your bank manager to make those lending decisions!

It makes me slightly sad to think of these good old days and how things have changed. We’ve all sat in a pub drinking a pint, looking at the black & white nostalgic photos of how things used to be. The times when you didn’t have to worry if someone was watching you input your online banking details, didn’t have to worry if someone was trying to steal your identity and especially didn’t have to worry if your bank was gambling away your savings in a financial game that would be best kept in a casino! And where has it got us? Has the computerization of lending improved the decision making process?

Credit Scoring vs Old Style Lending!

Has Credit Scoring really improved the decision making capabilities of major organisations? The current debt crisis would suggest otherwise.

Never in history has the general public been so indebted and unable to repay! You would think with the development of complex, computerized, mathematical systems, we would be able to prevent a debt crisis of the magnitude we face today. The truth is things have never been so bad! Why?

It’s because there’s no emotional attachment anymore. No sense of social & financial responsibility. We can now borrow money without ever having to look a single person in the eye! Think of the good old days when people knew every one of their neighbours. When the bank manager felt a personal responsibility to the people of the town not to lend out their money unwisely, protecting their money and his reputation! When you also felt the same responsibility to not let down that bank manager who had put his trust in you.

Credit scoring has taken away this emotional responsibility. Globalization has taken away this responsibility! Never before have we felt so detached from the financial consequences of our decisions!

Credit scoring has allowed millions of people to borrow much more than they can afford to repay. Just because you can make your current debt repayments, does not mean you are in a good financial position. Especially when you can use one credit card to pay another. Credit scoring does not allow for this type of behaviour. Do you think the personal bank managers of old would have detected this kind of financial behaviour? I think they would!

Credit scoring has also proved a financial obstacle for many creditworthy individuals! Why does being 19 and not a homeowner automatically make you a risky lending proposition. What if you have shown a history of financial responsibility over many years, saving most of your money regularly with your bank and as a result, don’t have much to show on your credit report. Credit scoring again would not take into account this type of credible behaviour. Do you think an old style bank manager would have picked up on this? I think he would.

Maybe I’m being overly nostalgic but I would definitely be in favour of a return to old style banking. Sadly the world has changed and I can’t see that ever happening. Can you?

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6 Responses to Longing For The Days Of Old Style Banking!

  1. CF says:

    I don’t know – I go into the bank to do a lot of my banking and the tellers and bank managers know me and help me out. I’ve been able to get favourable rates on my mortgage, for example, because of personal connections to management. I think the personal connections are still possible, it’s just a little bit more work on our end to foster them.
    CF recently posted..Creating a new normalMy Profile

    • Adam Buller says:

      I’m glad it’s still possible, maybe I should join your bank! I do a lot of my banking online and I think more people are being encouraged to use this method by their banks, taking away the personal aspect. I just feel the type of connections you mention are becoming less frequent and credit judgements are not based on the individuals true circumstances.

  2. Definitely not. Perhaps the world has changed for the better, because back then, banking was less convenient than now, since we have the internet.

    • Adam Buller says:

      You’re right, it’s definately more convenient. I’m just not sure if the convenience has thrown up more problems than it’s solved. Thanks for the comment!

  3. Ash @ Sterling Effort says:

    Hey Adam, I do think we’ve picked up some positive things from the natural progression of banking. I grew up in the 80s/90s. I remember being taught about shares. I come from a poor background. Back then, it was beyond my wildest dreams that I would grow up to be able to use a computer to manage my own portfolio of investments. I really do believe some elements of banking have changed for the better. That said, I totally agree with what you’re saying. The banks have lost our trust, and for good reason. They’re scamming the public in numerous ways and our ability to fight back is limited. I’d love to see S&Ls and the whole peer-to-peer lending movement gain better traction so we can take back some of the positive elements of banking that we’ve sadly lost.
    Ash @ Sterling Effort recently posted..Introduction to social lending Part 1 – Start growing your moneyMy Profile

    • Money Bulldog says:

      Yeah I suppose it has made investments more widely available and accessible to all. You make a good point there actually, if we could find some way to separate the aspects of banking so we retain the personal touch but still have the computerised element where it’s needed (Online Share Trading as you mentioned) maybe a happy medium could be found.

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