How did multiple bank branches of the same institution maintain an individual’s balance prior to electronic banking?

Question

What would stop people from withdrawing money from multiple banks and over drawing before all bank branches could be updated on the person’s balance?

In: Economics

Answer 1

Withdrawal limits based on total account balance and lots and lots of phone calls

Imagine you have $500 in a bank with branches in City A and City B.

Day 1: You go to the branch in City A and withdraw $300. Your balance at City A is now $200, but City B’s ledger still shows $500 until updated.

End of Day 1: City A sends a record of all transactions to the central office.

Day 2: Before the central office updates City B’s ledger, you try to withdraw $400 in City B.

Verification Process: City B calls the central office (or City A directly if suspicious) to confirm your balance. They find out you only have $200 left, preventing the withdrawal.