When I was nine, my best friend in the world was a kid in my class named Stewart McNaughton. After school and on weekends I would visit Stewart’s house, which was located across the road from Willoughby Park. Our routine consisted of joining a third friend, Stewart’s dog, Rover. The three of us would go across to the park and spend most of the day there. At that time Rover was a 10 month old Labrador. I say “was” because this was back in 1972. Not sure how long labs live but I’m almost certain Rover may have shuffled off this mortal coil some time ago.
On one occasion when I was visiting Stewart, we were crossing the road from his house to go to the park. Rover, who knew our routine was impatient to get to the wide open spaces of the par. He was then a very spirited pup. He took off up the road and was horrifyingly run over by a utility van. Stewart and I were left roadside with mouths agape. To our enormous relief, Rover got straight up and ran home whimpering and Stewart and I ran after him. Rover was pretty shaken but except for a few bumps and bruises he’d be ok.
The thing that sticks in my memory so vividly was that Rover never came to the park with us again. He was so traumatized by what had happened he would not step onto a road. Oh, he would leave the house but he’d stay on the footpath sniffing the verge and occasionally bark at passing vehicles especially vans. There was now a nervousness and alertness to Rover which had never existed before.
Most readers of my blogs will know about my war on dumb processes in banks. Particularly when a sensible decision is avoided.
A few months ago, we had a client present a very vanilla home loan to our home loan team. There was a snag though as the client had an unpaid utility bill of hundreds of dollars on their credit history. The bill dated back a few years and the client wasn’t even aware of it as the utility company had charged them whilst they were in the process of moving interstate and the final bill had gone to the old address.
To cut a long story short, as soon as we informed them of this the client paid the outstanding amount and having found a property they wanted to make a bid on they asked us to submit the application to the bank. Six months ago the bank would have accepted the evidence that the outstanding bill was paid and approved the application.
Here’s where it gets upsetting…
Our BDM at the major bank called our home loan team last week and asked them if they could confirm the outstanding amount was paid. This was quite normal procedure. Our home loan team responded that yes, it was paid. Could we prove it? Yes, we could. The banker then informed us that because the credit rating company could take up to 31 days to amend their records they would not be able to assess the transaction.
Now this was new. Sure the policy was always there but if there was no doubt that the process hadn’t yet caught up with reality – in the past – common sense would prevail and a human being would intervene. The loan would be approved.
Hang on. We could prove the outstanding amount was paid and we could get confirmation from the utility company confirming they would amend our client’s credit record.
So, why can’t an intelligent human being be entrusted to intervene into this process and recommend approval? Why revert back to a dogmatic process which will just frustrate all involved.
To understate things a little, the client was not happy.
In the current environment bankers have become more nervous than a snail in a hen house.
The above loan will be approved but the delay should not have happened.
The banker/BDM in this case is a little like Rover. He will do his best to get the loan approved but he won’t step off the kerb. That is, he won’t make a sensible decision based on the evidence before him.
If Rover was human, you could argue that he should look both ways before crossing. But Rover wasn’t human. He simply relied on his survival instincts.
All the RC has done is put fear into bankers. They’re now relying – even more than ever – on processes. Even if those processes are non-sensical they are part and parcel of the stupidity that is their KPIs. There is tremendous uncertainty amongst bankers. Some have told us that a substantial portion of their salaries (bonuses) have probably disappeared. Others have said there’s never a good day when you come to work any more. Many want out of the industry.
There is anger too. As stated previously an overwhelming majority of bankers have always done the right thing. But this RC was investigating misconduct. They weren’t focusing on the overwhelming majority. They were focusing on rogue elements in the industry and presenting them as the norm.
Like Rover, bankers have resorted to relying on their survival instincts and logical decisions will be avoided for now. There is no upside for them anymore. Sure they get to keep their jobs but it appears most of the ones we have spoken with would be happy to lose their jobs – especially if their termination was coupled with a redundancy.
And the client? We presented the application to a non-bank lender and highlighted the discrepancy in their credit record. We showed them the same evidence we showed the bank. They approved the loan in a day. The price was 0.02% higher than the bank.