Saturday 20 October 2018

Comment: 'Computer says no' is not good enough after bailouts

File photo: Depositphotos
File photo: Depositphotos
Donal O'Donovan

Donal O'Donovan

Good data can help lenders make better decisions, but banks can't allow automation to become a substitute for really knowing a business.

True relationship banking is crucial to successfully underpinning businesses through the longer term, and is also the key to a future for the banks. Good lenders know their own clients so well they can lend - and be repaid - when others won't. Knowing a farm or business customer from the bottom up and inside-out means a good bank manager can help that business in good times but also through the kind of problems that will inevitably arise in the life of any company.

The "computer says no" or even "computer says yes" model of banking is cheap but short-termist. It doesn't serve customers, and in the coming era of digital payments and non-bank lenders, it won't serve banks.

Customers will go elsewhere.

Bank bosses need to remember that if taxpayers had taken the same number-crunching tack, the banks would have gone to the wall long ago.

Irish Independent

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