I recently spoke to a colleague who studied Banking at university in the seventies. This was a time when banking was centred on the branch and the branch manager was an important figure in the local community. Opening an account was a big event for a young man about to leave home. You usually enrolled at the same bank as your parents and the expectation was that this would be your bank for life. There were downsides and his own experience of branch banking wasn’t great. He explained that ‘accessing your cash wasn’t always easy and you had to have a special arrangement with your home branch enabling you access funds at the university branch. ‘Friday’s could be difficult. Sometimes I was told (by Mr Shields who ran the sub-branch) that I had exceeded my weekly limit for withdrawal, even though there was money in the account! Convenience was in its infancy in those days.’
Of course things were changing even then. There was the secondary banking crisis which led to questioning of what it meant to be a bank and what institutions should be allowed to use the word ‘bank’ to describe their activities. On the retail banking side people were beginning to talk of the possibilities of self-service banking, though the concept was still new. Oh, and a mortgage was something you got from a building society (by the end of the seventies they had over 5,000 branches)..
My colleague’s professor was very much of the old school. A bank’s role, he believed, was ‘to shovel money from one sector of the economy to another. It lived by what ‘stuck to its shovel’. Of course there was skill involved – the bank’s profit was a ‘reward for risk-taking’ – but the one thing he firmly believed was that ‘banking is an art, not a science’. The emphasis was on knowing your customer and then relying on your judgement. The branch manager was someone who lived in the community and knew his customers, enabling him to make informed financial decisions.
Times have changed, but understanding your customers and their needs, as well as their ability to repay, remains an important aspect of banking. The difference today is that there is technology that keeps you informed and provides you with the information necessary to best help your customers. I suppose you could say the process has become more scientific, but in a highly competitive environment where people no longer ‘bank for life’ with one institution. Keeping your customers happy and loyal remains an art!