The faith and courage with which Giannini gave out loans became something of a legend all throughout the Pacific coast. He made loans on a handshake to anyone who was interested, and he never turned someone away. His moral integrity attracted streams of clients from all over. But, Giannini wouldn’t look at what he did as risky. After all, he was a people person. He knew not only the names and faces of all of his clients, but also all about their families and their financial situations; these people were a part of his family now.
When the devastating earthquake hit San Francisco on April 18, 1906, it was these personal connections with his clients that would save Giannini’s business. The city was a mess; people were wandering around like zombies in the rubble and smoke left behind from the aftershocks. Giannini could have gone into a state of shock like the rest of the city, but instead, he grabbed an old fruit cart from his stepfather and went directly to the Bank of Italy headquarters to begin transporting its reserves to a safe place.
Through the dusty streets that were filled with looters eager to take advantage of the damage left in the earthquake’s wake, Giannini and his partners quietly transported all of the Bank’s money and gold to his semi-destroyed house, hiding everything in his fireplace. But, it wasn’t so much the loss of capital that was threatening banks throughout the city. After all, other banks had also been able to salvage some of their reserves.
What made Giannini’s situation unique was that while the other banks were reeling from the loss of their customer account books, Giannini was able to recall all of his customers and the loans he had given out by memory. Other banks were paralyzed for months, unable to find their ground, but Giannini bounced back to business within just six days. He hung out the burned bank sign he had found and placed another sign beside it that read simply: “Loans like before, more than what was given before.” Almost overnight, the Bank of Italy was back in business.
It was the personal connections Giannini had created with his clients that enabled his business to spring back to life while his competitors floundered. After that event, many of the other banks would never be able to rebound; their customers would withdraw their money and move it into Giannini’s bank. He was the only banker they would trust.
Giannini was a firm believer that banks should be an active part of communities. Managers should know their customers like neighbours; they should be out and about instead of cooped up in private offices and remaining out of touch with the local pulse. He abhorred the old idea of a banker – one that was aloof, wore expensive clothes, and kept to himself in fancy quarters. No, if a banker was going to succeed, Giannini believed he had to know his customers inside and out.
Lesson #2: Keeping Your Connections to Customers is Key
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