Before modern technology, how did financial institutions protect against fraud and identity theft?
In: Economics
The biggest thing to understand is that financial institutions of the past generally operated on a personal basis and a local basis. Our modern world of global finance has little in common with the past and is nearly a company new thing entirely
“Banker” and other related jobs were a local profession. Banks and finance places generally knew their clients personally, their lives, their businesses, their kids, and such. It was a personal relationship.
They could also be pretty stringy. They were not interested in doing business with anyone who might be a risk. And by very many regular people, lending and finances transaction were considered a pretty shady if not just unethical business (because sometimes they were) in what they do and who they choose to do business with. For example they may only work with a certain ethnicity.
These institutions were also local. Limiting your area and amount of clients and actions drastically reduces even the possibility of fraud or theft. You know your customers. You know what’s happening with them. You don’t have to look far.
The easiest way to reduce issues was simply by choosing your customers carefully. You are not interested in doing business with people who may defraud you or otherwise run away to another town or you don’t know.
Money lending could also be ruthless. And many past societies had massive penalties, including major prison terms for fraud or failing to pay a loan. You really don’t wanna run afoul these people or screw them over.
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