Why Do Banks Act Like Banks

There’s an old adage that banks are more than happy to lend money to you, as long as you don’t actually need it.

In truth, while the banking industry is a popular punching bag, think about what would happen without them. Anyone who has tried to purchase a home knows that there are precious few people who are willing to spare hundreds of thousands of dollars or more based on someone’s promise to pay them back in thirty years. And with historically rare exceptions, banks have served as a safe place to store and manage money, and as essential trusted intermediaries between depositors and borrowers. They enable businesses to transact with each other and the public, facilitating money movement with such speed and precision that most people don’t even bother to balance their checkbooks anymore.

But let’s face it. When you read this headline, you likely did not think of laudable, virtuous care and utility. You thought of account maintenance fees. Transaction fees.  ATM fees.  Account number changes. Big banks swallowing small banks (rinse and repeat). If you are a wealth advisor, you thought of a client’s mortgage application morphing into a pitch to move their investments. Seemingly arbitrary decisions to curtail a line of credit or deny a loan. You thought of fetishistic standardization and inflexibility, of treating people like dollar signs.

In truth, there’s a lot to unpack in this dynamic. Part of it lies behind the scenes, where clients can’t see — banks dealing quietly with an imposing and ever-present regulatory and legal environment with dictates few civilians could ever imagine. Though conceived with the goal of protecting clients’ assets, this can lead to tough decisions, and tough decisions thousands of time over can lead eventually to an insensitivity in communication, becoming comfortable in leading with one’s face.

While none of us is perfect, some banks get more comfortable with this than others. Hence this article.

Over the coming months, I’ll be using this space to call out ways this industry can do better; where we can conduct ourselves to the mutual advantage of all involved, not simply for the unilateral advantage of banks and those who invest in them.

Banking ultimately is about promises – confidence and trust that these institutions will do their job and  not only honor the obligations they have been chartered to fulfill, but do so in a way that delights the client. With the bank failures and subsequent disruptions earlier this year, that trust has in some cases been shaken further than was already the case. It doesn’t have to be. From inception, Fieldpoint Private has had a simple credo: what’s right for the client, period. This is not a commercial for Fieldpoint and every day I am certainly reminded from time to time that we are not perfect. But our philosophy on these matters deserves to be heard, and I will appeal to my fellow bankers to reconsider some aspects of how they approach the business of banking – to think again about the difference between what they could do vs. what they have to do.

I hope you will join me.

H. Russell Holland III, President and CEO