I’d been wanting to read a book written by CIA agent, Robert Baer. The book – called See No Evil – was released just after 9/11. I wanted to wait for all the hype to die down before tackling the seriousness of the topic – failure of the CIA to detect and warn of 9/11.
I’m currently in Europe and have had much time on my hands on flights and airports etc. So, I downloaded the book and read it.
The subject matter surprised me. The hype at the time of the book’s release missed the important points about what the author was saying about the CIA.
In short, he was blaming the missing of 9/11 on a change of culture within the CIA. One where there was once tremendous reliance on experienced field officers to one where there is now tremendous reliance on technology.
He maintained all the tech in the world will not replace the personal relationships that a field operative can form. Tech could not read nuance or determine whether someone was lying or not. Tech was/is very binary.
Globally, banks have adopted technology wonderfully. There is so much that is good about technology in banking. The one point that provides similar parallels to the CIA, however, is banks’ determination to cull their experienced field operatives – their experienced Relationship Managers with a world of product knowledge and corporate history as well as some long term credit executives.
Between them, these two junior/middle management executives had the capability within a few hours to determine if there was a transaction in the offing or a waste of time. They didn’t need boxes ticked or forms filled out. Just simple financial analysis, long meetings getting to know the client and years of experience that pointed them to the right places to shine a light.
When an organization is in trouble, an experienced RM or credit manager will know before it’s in the press – by then it’s too late.
These field operatives have been replaced by process. As I’ve discussed in many previous articles, process minimises risk by excluding many potential clients deemed to be high risk. But process also carries its own inherent risks such as concentration risk (say in residential property for example).
Banking’s disaster came in 2008/9 in the form of the GFC. Very few bankers saw it coming. Banking’s response was to cull its field operatives. There are, these days, other forces that effect banks, the militancy of regulators such as APRA who issue edicts that the banks must follow (like limiting growth in home loan books and putting further restrictions around investment housing lending) – this is a good thing when you have process driven organisations. But regulators are once removed from the action.
Where the rubber hit’s the road is when a banker meets a client.
You may be forgiven for thinking that I don’t like banks. Nothing could be further from the truth. While we provide banks real transactions, they’re still the best source of funding on the planet. Hands down. We wouldn’t have a business without them. As a result of banks’ actions businesses such as ours are benefitting from banks culling of their Relationship Managers.
How will you know if this is affecting your business? Here are some of the potential warning signs:
- Your facilities with your bank have expired and you’ve not heard from your banker.
- You hear from your banker by phone once a year or when there’s a problem whereas previously you used to get a meeting once a quarter.
- You no longer have a banker. You received a letter with a call centre number to call should you have any needs or problems.
- The call to your banker’s cell phone is re-directed to a call centre.
- There is no phone number on written communications from your bank.
- Your banker takes stress leave.
The above usually means that if your banker was one of the relationship managers that survived they have been loaded up with so many clients that it would be impossible to contact each one annually. They have effectively outsourced their relationship management to us by proxy.
We are the field operatives that will understand your requirements and point you in the right direction.
Will we see another GFC coming? We’re also once removed from the action. Even if we do see a disaster looming, whom would we tell? But we can provide a better service than you’re currently getting and probably at a much better price.
Disclaimer: The author is not an expert on intelligence services.