Suman Oak reviews BankRUPT by Carol Realini

Written by Ashwin Rattan Tuesday, 09 October 2012 15:08
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About Suman Oak

suman oak

Suman was previously a lecturer in SNDT University and is currently associated with two major NGOs in Maharashtra and with the International Humanist and Ethical Union (IHEU).


She was active in the Radical Humanist Movement started by M.N Roy, until 2000. She works with ANiS (Andhashraddha Nirmoolan Samiti) a progressive rationalist movement where she is involved in the translation of books, speeches, reports and letters from Hindi and Marathi into English, and vice versa. So far she has translated more than a dozen books and a huge number of articles, speeches, letters etc for this and other movements. 



This book tells us 'why banking is broken and how it can be transformed'.


To write such a book with a provocative title, while still in the banking business is certainly courageous and as the author mentions at the outset, 'her courage comes from her commitment to the idea that all people should have affordable access to banking that empowers their life and work.' Somewhere in the book she also says that like food, home, education and healthcare, banking should be everybody's right.


                50 years ago banking was not as costly as it is today but did not offer any special services either. The huge banks of today have an excess of computers, branches, websites, mobile applications and ATMs but have lost the compassion and dedication to their customers that the unsophisticated banks of old had in abundance. The common impression about today's banks is, 'as prospects we are wooed and ascostumers we become suspects, even adversaries who must be charged for every imagined transgression'.


                Since the local banks have almost disappeared people have to bank with the few large banks that care little about individual needs but more about their compensation packages, their careers and themselves; especially the higher ups. They ignore the problems that have caused the present crisis, blame the government or the 'greedy' customers complaining about their underwater mortgages.


                Ms. Realini sees the crisis that the US, the Western economies and the world is experiencing, as an opportunity to take a fresh look at a different kind of banking - banking for the needs of the middle class who have to watch daily expenses, who empathize with their neighbors, dream for the better future of their children; banking for the small business owners or creators of new businesses with only the equity of their sweat and hard work; for the needs of the ordinary employees of the banks too. All these ordinary people don't have to accept the status quo.


                She cites the example of two bankers depicted in the 1946 classic movie 'It’s a Wonderful Life.' George Bailey whose approach to banking is community oriented, with an eye to long term growth and prosperity of the community, sees the inherent good in his fellow citizens and spends time to understand his customers and their needs. The other banker Henry F. Potter conspires for only short term profits, lectures on the laziness of workers and disdains the idea of working class aspiring to own their homes; he is convinced, 'only the fittest should survive and use their wealth to accumulate more wealth while the underclass is good only as a source of labour and cash for the wealthy.' George Bailey, the local small banker earns tremendous goodwill from his customers who rush to save his bank from collapse when faced with adversity.


                Sadly enough, bankers like George Bailey and their local banks have almost been eclipsed by the big banks with their bankers having the Henry Potter philosophy, who are accused of violating Consumer Fraud Actand Consent Agreements and of investing in risky derivatives. The common people have no choice but to bank with Henry Potters since the George Baileys have disappeared from the scene; they have no sympathy for the self inflicted wounds of these big banks and are convinced that the great recession is brought about by these big banks.


                The US government used tax payers' money to bail out these large banks hoping that the money would be used to help ordinary Americans save their homes and avoid bankruptcy. But the money was utilized for disbursing performance based cash and bonuses and the CEOs' personal takes. They did nothing to rectify millions of home loans at risk. Many applications for 'Home Affordable Modification Programme' loans were summarily dismissed; those cases that were heard were eventually cancelled; the most common reason for the dismissal being 'missing paperwork' , in many cases the banks themselves were responsible. All this sounds very much like what generally happens in India. Individual borrowers are blamed for the loss of papers instead of the big bankers who made fortunes constructing a system that is deeply flawed. On top of it, all this while, record bank bonuses are announced and paid, the executives getting a whopping share of it.


                The author analyzes the causes of this decay in the chapter 'Four Pillars of Decay.' They are: 1. decline in customer service, 2. various complex bank fees that she calls 'Death by a Thousand Paper Cuts', 3. the banks' role in the financial crisis and 4. the recovery from the great recession.


                As far as the decline in customer service is concerned, the customer has no choice. There is risk in putting your money in the small banks where service is good, because of the risk of it being swallowed by a big bank. The service in all big banks is equally bad. Only the lowest paid, unempowered bank employee or an automated robot tends to the common customer. The empowered highly paid decision makers are insulated in their cabins from the lowly common customers and attendonly to the top 1 %of the population. However when this common customer visits an Apple Store or a Toyota Dealer, he gets outstanding service. It will take just one bank to adopt the Apple's ways of dealing with the customers and the others will have to fall in line.


For more about BankRUPT, click here.


Part 2 of Suman's review is coming shortly ... 



About Carol Realini


Carol is a successful CEO, entrepreneur and board member with technology and financial services industry experience.  She is a globally recognized technology innovator and has successfully led companies through initial public offerings, as well as into acquisitions.  She is driven by a passion to improve people’s lives through technology.


Carol has extensive experience in financial services (mobile, payments) and technology (mobile, smart phone applications, payments and banking, enterprise software, distributed computing) and has worked extensively in India and Africa on mobile money.  

Last modified on Thursday, 11 October 2012 10:25

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