The Principles of Banking, 2nd Edition

Afterword

There is no need to change too much of the text that appeared in the Afterword of the first edition. It remains current, as indeed it would be had it been written 100 years earlier.

In 2012 I wrote:

The profession of banking is an honourable one. To be given a responsibility at any level of a banking institution is to be entrusted with a valuable part of society's well-being. Bankers should never let this thought stray far from their minds.

Sound judgement requires knowledge and experience, of the right kind, if it is to be exercised during both good and bad economic times. This is not always a core belief of those in senior management. In his book Bounce: The Myth of Talent and the Power of Practice (London: Fourth Estate 2010), Matthew Syed noted that:

For years, knowledge was considered relatively unimportant in decision-making … This was the presumption of top business schools. They believed they could churn out excellent managers who could be parachuted into virtually any organisation and transform it through superior reasoning … Experience was irrelevant, it was said, so long as you possessed a brilliant mind and the ability to wield the power of logic to solve problems.

This is nonsense … successful decision-making in any situation characterised by complexity – whether in sport, business or wherever – is propelled not by innate ability but by the kind of knowledge that can only be built up through deep experience.

An understanding of the core principles ...