Good Relationship Banking

I have been doing some re-reading of a favorite book of mine "Emotional Intelligence" by Daniel Goleman. In one of the chapters it talks about John Gottman, a University of Washington psychologist who has charted the emotional ecology of marriage with such precision that, in one study, he was able to predict which couples seen in his lab would divorce within 3 years with 94% accuracy!!! This is how he does it:

While the couples talk, sensors record the slightest flux in their physiology; a second-by-second analysis of their facial expressions (using the system for reading emotions developed by Paul Ekman) detects the most fleeting and subtle nuance of feeling. The result is akin to an emotional X-ray of the marriage.

What does this have to do with banking you might be thinking. Well, this is my thought.

Although it would be good for all couples to go through such emotional analysis of their relationship/marriage, we can't force people to do it. What we could do is to give every couple a financial incentive to try it.

Set up a new type of bank that grants loans to married couples on the condition that they pass John Gottman's test. If your marriage is proven to have a 94% chance to succeed and doesn't lead to a divorce, it's probably a good chance that the couple will work well with each other to solve out financial difficulties that arise in the future.

I don't mean to suggest that all married couples that stay together will fully repay their loans but the premise is that loans to couples who can stay together and solve their problems in ways that are not destructive can be more reliable.

It's just another metric to add to the decision to grant a loan if you are a bank. I admit it is an unusual practice/metric to add. But if good relationships lead to less loan delinquency and this metric is set as a condition before granting a loan, it will also bring social good in addition to more reliable profits for banks.

In the midst of the worst credit crisis and major scams such as the Madoff scandal, a lot of people talk about going back to the basics of banking, building anew relationships of trust. Investment banking used to be described as relationship banking in the not too distant past. Making loans to couples whose relationship is good can be Good Relationship Banking in the most literal sense of the term.

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