I have been thinking more about customer alignment lately. We are adding this category in the LendIt Fintech Awards in 2019 as Scott Sanborn, the CEO of LendingClub mentioned in his opening keynote in April. It is an issue which gets to the heart of what is wrong with banking today and how fintech can help create change.
First, let me begin with a personal story. I have had a banking relationship with the same large bank since 1993. I opened two accounts, business and personal, when I was getting my first business off the ground. Needless to say money was really tight. I would occasionally bounce checks and I used credit cards as a way to borrow money but I managed to get by. What I really needed back then, but didn’t have, was a financial institution that had my best interests in mind.
I remember one time when I mailed a batch of checks without the money in the bank but was confident by the time the checks were deposited the money would be there to cover them all. It wasn’t. So, I ended up bouncing four or five checks and paying a fortune in overdraft fees. But here was the kicker. The bank could have processed two of these checks but instead the largest one came out first, so all the checks bounced.
Thankfully not all banks do this but it is common practice in many banks and back in the 1990s I am guessing it happened a lot more. But I believe the days are numbered for this kind of program.