It is hard to understate the importance of digital transformation and all things tech in banking, writes Chris Skinner, but humans will always have their part to play.

I enjoy being around bankers who have been immersed in the industry nearly all of their lives and hearing their war stories. I heard two stories recently from a retiring banker, and thought they would be worth sharing to show just how far we’ve come.

This particular friend started life in international banking at a distant outpost of the bank before ending up as chairman 50 years later. He had been with the bank man and boy, and enjoyed telling me about one incident when he was working in a branch on an island in the Pacific Ocean. One day a chap walked in with long blonde hair, a bright island shirt, shorts and sandals, carrying two suitcases. The cases turned out to be stuffed full of US dollars, and the potential client said: “I’d like to open an account and deposit this lot, all right?”

Well, my banker friend thought it jolly well might not be all right, and told the gentlemen that the bank would need to count the money first. Assigning the counting to his two most ineffective staff members, he asked the gentlemen to wait with a cup of tea and slipped off to call the bank’s head office. Explaining what was going on, he enquired as to what the policy was in this situation. No one knew, so they told him to call the regulator. Duly he called the then regulatory offices in London, explained what was going on and asked what the policy would be. They didn’t know and told him so, ending with the line: “It’s really up to you to decide.”

He decided it was probably dodgy and so returned to the waiting room to say that it was with great regret that he had been informed he could not open the account for the cash-carrying customer. Seeing him out of the front door, he then returned to his office and called every other bank on the island to warn them about a chap with blonde hair and two suitcases.

The good old days?

Those were the days, you might think. It would be different now. 

My friend then shared another story, which took place some years later after he had returned from the Pacific to work in the bank’s head office as head of corporate banking. One day there was a panic. The bank had mistakenly transmitted $737m overnight to a group of correspondent banks due to a programming error. This was back in the 1990s, when these things ran in overnight batch updates. Oh dear. He had to spend a day with the head of correspondent banking, calling all the other banks who had received funds in error, asking if they would send them back.

Funnily enough, because everyone was very gentlemanly and cordial in those days, the correspondent banks did exactly that and within 24 hours all $737m had been returned. I commented that it is obviously so much better today, what with real-time systems, software that locks money-launderers into a loop and payment structures with bulletproof cybersecurity.

My friend countered that actually, not a lot has changed. If people mess up the system, it is still the human hand and relationships that will sort it out.

Darn. And there was me thinking machines could take over the world.

Chris Skinner is an independent financial commentator and chairman of the London-based Financial Services Club.

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