Friday, February 23, 2007

Sometimes things at least seem to change

In the early 80's Bank of America was in the process of moving from the largest bank in the US to the second largest. It was primarily a result of a bunch of bad agrucultural loans they'd made. But, the bank was pretty much a mess. For decades they'd had a "promote from within" policy that meant they didn't hire middle manager types from outside the bank, creating kind of an inbreed way of thinking that didn't help them much when things went sour.

They made an abrupt change in course, purposely sending head hunters out into the hinterlands to hire experienced bankers from other money center banks. I was one of them. It didn't work out real well for them. A lot of us got fed up with them and quit withing the first year or two. I don't know the exact number, but of the 5 outside hires I knew personally, 2 of them quit within 6 months and 2 quit within 2 years. That includes me.

I was in the Bond department, doing Systems Planning. A friend of mine was in Retail Systems and he told me a story that was just stunning.

Back then ATM's were still kind of new, and Bank of America didn't have ATM's online 24 hours a day. They brought them all offline from midnight to 6 am to do batch updates. Banks don't rely on once a day batch processing any more but back then they did, so it really wasn't yet possible to keep an individual ATM up and going 24 hours without some kind of down time for batch updating, but you didn't need 6 hours, and you didn't need them all offline at the same time.

My friend put together a proposal to change the way they updated from ATM's so that they could keep them all online 24 hours minus about 10 minutes every day, and not the same 10 minutes for every machine. It required some fairly deep changes in the way they did daily balance processing and required approval of the EVP who ran Retail Banking (Retail Banking is banking services for consumers). My friend made the presentation. The head of Retail Banking asked one question.

"Why would we want anyone who's on the street needing money at midnight as a customer"?

Those guys were really in touch.

Now they seemed to have flipped their way of thinking 180 degrees. They want to provide credit cards to residents with no social security cards or credit history.

More on Bank of America later.

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