An Attachment to Analogs and Antiquities

The biggest banks in the world are reeling from losses brought on by the mortgage crisis. Many are struggling to maintain their stability in the face of the global impact on financial markets, where the erosion of share prices have wiped out investments and expected margins. But in the small town of Oakwood in east Texas, America's smallest bank goes about its day-to-day business the same way as it did more than 30 years ago. The Oakwood State Bank uses analog equipment, typewriters, manual posting of transactions, and employees that would have been retired more than a decade ago.

Oakwood used to grow cotton. Today, it is simply known as a town that used to be. All the businesses that thrived there decades before have disappeared. Its 84 year old President R R Wiley doesn't mind being an institution capsulized in time, in the 1970's to be exact; and he seems proud of the fact that the bank is an old world bank, "we're run by antiques" he proudly quips. George Solomen, a data processing salesman has tried selling computers to the bank for 20 years, but he concedes that his failure had caused him to root for this last holdout against modernization.

The bank has 600 Checking Account depositors, no Savings Accounts, and every statement is manually typed by 75 year old Lela Coates. Posting is done by her assistant, 71 year old trainee JoAnn Bing. Bank President Wiley says no automated voice system can match Lela's voice recognition abilities, and no computer has ever won the hearts of its customers; even if Lela tucks the old posting machine every night and practically prays for it to work again the next morning. The bank's customers are happy with the set up and many have repeatedly expressed that the bank takes good care of their needs.

The ages of the bank's officers and employees may be the single most important factor in retaining its customers because of their knowledge of the nuances of each depositor, besides being of the same age bracket or older. The difficulty of adjusting to and getting used to technology is eliminated, and it gives them the confidence to perform their own transactions without fear of looking silly or being duped. Also, the personal relationships established over many years had developed mutual trust and respect between the customers and the bank's personnel; strengthening the bonds beyond mere business transactions and impersonal interaction.

This ideal situation of antiquated equipment operated by old people for clients as old or older than they are may receive a sudden jolt. The old machines could be orphaned units - parts no longer manufactured nor serviced. Computers may be the only option if the existing machines conk out. The passing away of its "specialists" could impact on voice identification or posting and filing of statements. New employees would have difficulty adjusting to the manual mode while dealing with the customer base who might resent their lack of personal knowledge on each account. They could lose customers!

There is a sense of nostalgia about living in the past and a level of comfort in the stable order of people and surroundings, even if the only thing that's advancing are their ages. The danger lies in the shattering of this comfort level when people pass away or sudden change is resorted to by the circumstance of their conditions. To an outsider, the town's bank might be mistaken for members of a nursing home allowed to perform role playing games in a make believe bank to keep their brains functioning; but the bank is real, the personnel are salaried, and the customers are faithful. Regardless of how stagnant their growth is or how small their profits are, they are still better off than most of the biggest banks in the world. And their income is enough to sustain their simple needs, medication, and health requirements.

There's a lesson here for the "financial wizards" of Wall Street and the technology manufacturers of automated banking systems. This is Banking Anthropology 101, please take out your pencil and paper.

Haarrrwwwwk...Twoooooph...Ting!

Mortgage Mortuaries in the Making

Mortgage companies in the UK are throwing caution to the winds by earnestly liberalizing its lending policies, salivating at the huge profit potential of first time buyers to raise demand for business growth. The methods and packages offered to young couples and singles carelessly ignore the painful result of this approach that caused the collapse of the US sub-prime mortgage market; a big contributor to the current US recession. Prudence, it seems, has been cast aside, even when evidence of homes turning into virtual mortuaries that housed the deceased dreams, aspirations, and relationships of former US homeowners, have yet to be buried or cremated.

Young couples with kids and groups of singles are being offered 3% to 5% deposit from the traditional 10% criteria. On top of this, they are prepared to offer loans of 5 times the buyer's annual salary with come-ons of absorbing surveyors fees, solicitors, and the initial cost of home furnishings. Options of lower rates, cash back and loan consolidation are also thrown in. But no mention is made if the absorbed fees will be due if payments are delinquent; if lower rates are only for the first few years; how much will be deducted from the cash back option; nor what terms there will be for the loan consolidation. These would be part of the contract when the buyer's hopes have been raised, is made ready to sign, despite "minor changes in contract term rates". These alone are means of inducing borrowers to purchase a unit for which they may not have the capacity to pay.

By pointing out that rental rates are equal to the monthly mortgage rates with the added disadvantage of being uprooted if the owner decides to retake the property, young people are enticed to buy since owning a home is built into their psyche'. And here's the salt on the wound: the mortgage companies also have programs that would make the parents' homes the collateral in lieu of a deposit. Today, the number of adult children borrowing from parents' retirement funds to pay for debts and mortgages are rising at an alarming rate. If this trend continues,these "dependent adults" will render their parents homeless and penniless after sacrificing many years and all their resources to support their children's extravagant lifestyles.

Couples may be broken, friendships can be ruined, and families can disintegrate, all because of an objective to spur business growth that feeds on human desires and weaknesses. This approach is predatory and harmful. Potential buyers seeking to make a home where they could build their dreams, may wake up to a nightmare of seeing the carcass of their hopes inside a virtual mortuary, which they have brought themselves to.

Haarrrwwwk...Twoooooph...Ting!