21st May 2012

Monetary tests: Banks, bankers, and customers

[In French: L’épreuve de l’argent: Banques, Banquiers, Clients]

Here follows a summary of my recently released book, published by Calmann-Levy, which might interest Charisma readers.

Epreuve de l'argent, by Jeanne Lazarus

L’épreuve de l’argent Banques, Banquiers, Clients

My book aims to describe what happens in retail banks in France at the beginning of the 21st century. It examines the social consequences of the fact that, in the pursuit of everyday life, a bank account has become a contemporary requirement. It seeks to respond to a question that the 2008 financial crisis has rendered highly topical: why has contact with banks become such an everyday struggle? And, drawing on the theoretical framework developed by Luc Boltanski and Laurent Thevenot in On Justification, how might this constitute a form of social ‘testing’?

The often suspicious, sometimes mutually aggressive relationship between bankers and customers is argued to be based on structural contradictions that arise from a conflict within the definition of the bank: it is understood as either a social institution providing a public service, or a market form pursuing solely monetary aims.

In 1966, a process began which French historians have termed ‘bancarisation’. This describes the way in which the bank account increasingly became a requirement for the domestic management of money and had the ultimate effect of incorporating all social classes into the retail banking system. Around this period, banks were presented as quasi-governmental services, offering products regulated by the state, and seeing themselves as having a mission to supervise the finances of the population. However, the 1980s brought about a commercial ‘revolution’, with a major transformation in banks’ management and recruitment processes, as well as the services they offered to customers. The latter became now grouped into ‘segments’ and described in terms of ‘profiles’.

Within banks, numerous contradictions in the injunctions accompanying the insertion of people in the capitalist economy can be seen to intersect. The study of what takes place in these institutions reveals an aspect of what Robert Castel calls the metamorphosis of the social question. The popularisation of banking in the 1960s and 1970s was predicated on the definition of an average bank customer as an employee with a permanent income, with predictable patterns of saving and borrowing. However, employment situations have changed, careers have become less secure, and the employment situations of younger generations are now more complex: what, then, is the impact of this on relations between bankers and clients?

The book’s thesis is that banks continue to demand evidence of forms of stability from their customers (professional, as well as personal and familial), but that, for a significant number of them, this is only partially related to their actual social experiences. This leads banks to reject a portion of these customers, while for others finding ways to act ‘as if’ they resembled the stable employees necessary for the banks to be able to complete the financial transactions for which they are designed. Customers meanwhile, through forms of self-performance, work to ensure that they resemble the model the bank requires.

The book is based on a number of ethnographic studies: the first took place in bank branches themselves, at both counters and in offices, where I observed numerous meetings between bankers and customers (one hundred, in two competing banks); the second was at a number of specialised credit institutions , where I observed a range of customer-contact sites (including counters at department stores, in credit sales call centres, in debt recovery operations); this research was supplemented by interviews with clients and banking professionals.

In addition, the book draws on a parallel research project which assessed a micro-credit social lending scheme, undertaken on behalf of the not-for-profit organisation Caritas France. This research enabled me to meet a range of bankers, voluntary associations and loan beneficiaries. Gathered in a space at the edges of the banking system, this provided valuable insights into the types of relationship that banks enter into with their clients.

Finally, the book draws on interviews with mortgage borrowers aged between 25 and 40, living in Paris, with levels of cultural capital higher than their economic capital. From this, it was possible to observe their efforts to comply with the image of a ‘good bank customer’.

An important part of research is the description and analysis of the characteristics of a ‘good’ banking customer. It also seeks to highlight concerns that are relevant across a number of social spheres, including the domestic economy, as well as to the ethics of monetary relationships. It argues that the spread of mass banking and the availability of a diverse selection of banking ‘products’ have transformed ways of calculating and ways in which the appropriate uses of money are defined.

Writing in the 1960s, in a text on banking, Pierre Bourdieu, Luc Boltanski and Jean-Claude Chamboredon emphasised that people were resorting to credit without having an ‘ethics of credit’, that is to say without their acts of borrowing being accompanied by a conscious moral justification. They nonetheless observed the existence of a strong “ethics of thrift”, and predicted that, with the spread of bank credit, an ethics of credit would solidify. More than fifty years later, such an ethics of credit has failed to materialise. The major change has rather been the erosion of an ethics of saving: transformed into acts of ‘investment’, savings has lost its former moral coherence. In the 19th century, the act of saving had been elevated to the status of a moral and civic virtue. It was intended to play a role not only in the moral improvement of the working class citizens and the rationalization of their lives, but also in their integration into the nation: through people’s use of savings accounts, their meagre savings and those of their children were to be integrated into the changing French economy. Yet these moral foundations have now become outdated and are rarely mentioned by the actors involved in giving monetary advice or, if so, only in passing. Therefore, while the morality of money has evolved, it is precisely in no longer seeming to be connected to the morality of money management.

Banks, meanwhile, maintain a ‘fuzzy’ morality around money, for the very fact that this allows them to juggle several types of customer relationships. I have identified four: bankers can become councillors, traders, as well as judges and, occasionally, saviours. These four ideal-typical types of relationship between bankers and clients structure their exchanges and are at the heart of the power relations between them.

These four figures also become contradictory injuctions for bank employees in their own definitions of a job well done. The result is that customers are evaluated to differing degrees, which, for these customers, becomes a source of uncertainty. The source of the bank’s social power is that it continually assesses clients, and in the course of this assessment reveals their potential ‘flaws’: flaws in their home or professional life, administrative flaws or flaws of economic stability. In some cases, shedding light on these flaws leads customers to what I call a ‘banking crisis’, by way of an analogy with the “crisis of witchcraft” described by Jeanne Favret-Saada: they are “captured” by their relationship to the bank which then occupies a central but ghostly place in their everyday lives. In these banking crises it is possible to observe the social importance of the contemporary bank and the violence felt by those who become rejected by it, whether by being told they are “bad customers” or as those with whom “we can not continue”. At times, these crises can be a matter of life and death.

By presenting what takes place on both sides of the banking counter, the organisation of the book and the presentation of its results are intended to make visible what takes place in the bank symmetrically. It examines the business logic and the logic of customers either at the same time, or in juxtaposition to one another, so as to as far as possible respond to the program of a pragmatic sociology consisting of ‘following the actors’. Drawing also on an interactionist sociology, a significant part of the argument consists of going into the detail of conversations between bankers and customers in order to detect there their logics of action, the constraints they are bound by as well as the types of justifications they mobilise. The importance of activities of evaluation in the work of banking employees means that these are constantly referred back to, at least implicitly, and to varying degrees, which the book tries to uncover by following the progress of banks’ meetings with customers step by step.

The book thus follows the progress of banking tests, in four parts.

The first is historical and traces the development of new monetary tests. It provides the context for the rise of the contemporary bank and describes its foundational contradiction, consisting of two competing definitions: the bank as either a social institution or a site for monetary exchange.

The second part describes ‘what happens’ in banking offices: it describes the four banking ‘figures’, as related to clients’ records and behavioural rules. Each of these figures is related to one definition of what the bank is. But the book also looks from the perspective of the client by showing that ‘that which the customer comes with’ is ‘attached’, in the sense introduced by Latour and Callon, to a number of social spheres.

Given these multiple registers, the third part of the book turns to the money management support that the bank offers its customers: it details this in relation to advice surrounding specific types of banking products, including credit and savings products, and the effects of this advice on how money is used and calculated. This part shows that, in the contemporary bank, there is no cohesive normative discourse: this would require a clarification of the social role of the bank that remains inevitably absent.

The final part focuses on specific tests that can be seen as crystallised moments of evaluation (opening an account, authorising and overdraft and obtaining credit). These tests sometimes give rise to conflicts, which are conflicts of qualification surrounding what is taking place. They stem in part from the normative tension stemming from the competing definitions of the bank, but above all from the variable application of the rules it sets out, the result of which is to threaten the legitimacy of its own judgments.

The book then follows customers into their meetings with the bank, outlining the framework upon which their exchanges are based. Through the observation of customers it shows the nature of their attachments, and examines how they use the financial tools made available to them. Finally, by presenting customers’ own experiences, it is able to assess both the variability of the bank’s rules and the strategies of resistance that customers themselves develop.