Thursday, 3 December 2009

Banks And The Clipboard

Apply a solution to something and Pareto’s 80/20 rule kicks in every time. In the world of ‘Business vs. The Banks’ - which is how many people see it - there are 2 things that are happening with banks that are not well realised.
I don’t like either of them. This is not a case of ‘take me back to the good old days’, though I am tempted to suggest we did not carve it up so badly then. As a business on one hand or a Bank manager on the other, you knew where you stood.
The point is that Banks have taken away most of the local discretions. There were reasons for doing so, some of which were brought on by the severing of the old trodden path of promotions that gave a manager an all round education in both handling people and handling business circumstances over a number of years. The tutelage of senior managers by example was part of the mix and usually the result was a manager who had been round the block, knew the Bank’s operations intimately and had had time to build his own skills in gauging business propositions for the Bank.
There are not that many managers left who came up through the ranks in this way. Those that are, tend to be in senior roles, and the majority of businesses are left far beneath them. Even for them the discretions are heavily managed from above. This means 2 things. It gives the Bank a stronger control over the lending book. Policies and Directives can be applied evenly and technology can be used to grade and report on track record to give a measure of risk. 
At the sharp end the business manager has to submit an application for approval to a lending centre often far away. The applications are processed and reviewed according to set measures by relatively junior officers before signing off by a senior lending officer. Neither has seen the customer, or been to the premises, or looked the business in the eye in any way at all.
So, as a business manager, with half an eye to protecting a reputation and building some kind of career, there is a disincentive to submit anything for approval that isn’t ‘watertight’. Despite having targets and other steering mechanisms to attend to, and the more junior the manager the less forgiving they are, he/she is disinclined from the start to put up anything that is not liked and does not possess a belt, braces and a safety chain.
Again there are good reasons for placing a note of caution centrally on such industries as construction, transport, retail, leisure and entertainment, but the caution sticker has branded everything in those less favoured sectors. The balance of risk and probabilities has been skewed too far. It is all very well for the Government to issue exhortations to the banks to lend more freely, and the Government’s loan guarantee scheme has a helpful place, but that overall cautionary inclination is paramount. The Banks can say they are open for business, they are lending and they welcome approaches. All of that is true, but the mechanisms that have developed do not support this in practice.
The local discretion has gone along with a need for much experience. And so too the inclination of the local manager to bother with anything that is not going to get a straight ‘approved, on the basis submitted’ has gone too. The clip board now rules and it is not particularly okay.
Blame Society generally. Blame Globalism. Blame the Economy. It’s why everything is controlled from a far away call centre who has no idea where you mean;  it is why services cannot cover the needs of locals. It’s why it isn’t worth complaining a lot of the time because ‘they’ don’t know what you are talking about. Local service is a luxury no one seems willing to provide because 80% of the time an overarching half baked gloss will do. But that is another topic.
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