Prudent banking 101: A lesson from Mary Poppins…

I can never pronounce Supercalifragilisticexpialidocious as well – or as fast – as my 12-year-old daughter, but I have always been fond of Mary Poppins. At least the 1964 Walt Disney movie, which I have watched over a dozen times (ah, the delightful perils of fatherhood!).

And being one who never likes or trusts bankers very much, I make it a point to tell them that every banker must see Mary Poppins at least once. For it holds a very important and fundamental lesson for their profession: the need to win every customer’s trust and confidence.

Mary Poppins story is set in London in 1910. It revolves around the household – especially the young son and daughter – of aloof Mr. Banks, who works at (where else?) a leading bank, and believes that a British household ought to be run with the strict authority of a British bank. The new nanny Mary Poppins has very different ideas and finally Mr Banks meets someone he can’t bully into submission…

The movie has many interesting scenes, but one that is directly relevant to bankers is when Mr Banks takes his daughter Jane and son Michael to his work place, the Dawes Tomes Mousley Grubbs Fidelity Fiduciary Bank to give its full name. Mr. Dawes, the bank’s elderly chairman, aggressively tries to persuade Michael to invest his modest savings (all of two pence or tuppence) in the bank. Here’s the song that extols the virtues of what banks do with people’s savings:

If you invest your tuppence
Wisely in the bank
Safe and sound
Soon that tuppence,
Safely invested in the bank,
Will compound

And you’ll achieve that sense of conquest
As your affluence expands
In the hands of the directors
Who invest as propriety demands

You see, Michael, you’ll be part of
Railways through Africa
Dams across the Nile
Fleets of ocean greyhounds
Majestic, self-amortizing canals
Plantations of ripening tea

All from tuppence, prudently
Fruitfully, frugally invested
In the, to be specific,
In the Dawes, Tomes
Mousely, Grubbs
Fidelity Fiduciary Bank!

Read the full lyrics

Watch the song from Mary Poppins movie:

But young Michael has other plans: he wants to feed the street pigeons with his money, which the bankers dismiss with utter contempt (“If you feed birds, you get fat birds!”). As the song continues, the pressure is on Michael and Jane’s father, a clerk at the bank, to sway Michael. When Michael refuses to give the Elder Mr. Dawes the tuppence, Dawes takes it from him.

Michael protests very loudly and screams: “Give it back! Gimme back my money!”

Other customers hear this and misunderstand – if this is the kind of bank that refuses to give back tuppence to a little kid, they reason, can anyone’s money be safe here?

Client 1: There’s something wrong. The bank won’t give someone their money!

Client 2: Well, I’m going to get mine! I want every penny!

Client 3: And mine too!

Client 4: And give me mine too!

That starts a run on the bank that soon forces them to suspend business…

When I encounter arrogance or indifference at my own banks, I sometimes wish I could play little Michael’s part and trigger a bank run. After all, I have handed a little more than tuppence to these banks…

In almost a century since that fictitious in Mary Poppins incident took place, banking has modernised but the core values remain the same. Banks peddle other people’s money in trust, whether accepting deposits or giving those deposited funds out again as loans. Banking is a necessary service in modern society, but unless bankers engender trust, their industry cannot function.

When the film was made in the 1960s, this financial event seemed positively quaint, but it has returned to spook us a year ago in September 2007: a bank run (on Northern Rock), something not seen in London since 1866.

Commenting on 19 September 2007, and tracing the history of bank runs over the centuries, Jon Henley of the UK Guardian also referred to Mary Poppins: “The enduring popularity of this film might be seen as evidence of a popular lack of confidence in the banking system”.

A few days later, on 24 September 2007, Niall Ferguson wrote in the Los Angeles Times in a commentary titled ‘Mary Poppins economics’: “Recent events on both sides of the Atlantic have made it not merely desirable but imperative that the world’s leading bankers and their clients watch this movie – if, that is, they want to avoid Banks’ fate. For it has not only been Northern Rock, the British mortgage lender, that has been menaced by a loss of customer confidence…”

And we now know how the troubled Northern Rock bank heralded the massive financial crisis and meltdown of banks and mortgage companies that has come to light in the past few weeks.

Customer confidence in individual banks and the banking system as a whole has now reached the lowest in more than two generations. The over-paid and over-ambitious bankers are belatedly realising that the biggest virtue in their profession is the trust that individual depositors place in them. When that is gone, everything collapses.

It takes calamities for some people to realise the value of keeping fundamentals intact. Let’s hope the banks and bankers, as they pick up their pieces in the coming weeks and months, will never again forget the basic lesson of Mary Poppins: robbing a little boy of his tuppence is bad for business.

Let’s end this post with these are scenes from Mary Poppins of the song with the longest title of filmed musicals history: Supercalifragilisticexpialidocious