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?