Shortchanged by Shortcuts? In almost every case in which a client came to me wanting to use their big bank for the loan, the reason they gave was that it was simplest solution for them and not that they had vetted many alternatives. They hadn’t determined through a screening process of any kind that their bank was the best choice, the criterion they used was they already bank there. Pure Availability and Representativeness in action. There was no thought given to the moving parts or how the bank performs, or might fail to perform, when the buyer needs them most. These buyers used their bank because that bank was at the top of their mind when they thought of getting a loan. Hello!? The word bank is synonymous with a place to get loans – you can’t get more representative than that. Even though in a competitive market your ability to close on time could make or break the deal, few consider this aspect when choosing where to get their money. It’s a pretty impactful shortcut. As with Realtors, banks know that they can get your business by focusing on getting to you first. The reality of your susceptibility to the Availability Heuristic trains the banks the same as it trains Realtors. They both know their actual performance can take a back seat to speed. They don’t need to be good to get your business. They just need to get to you first. The masses are driven by Availability and Representativeness and your bank knows this. Every time you walk in (or log in) to your bank, you see that person smiling at the desk, the signs and ads for what great rates they have, and it’s pretty much over. They own your mind share. They don’t need to worry that their loan underwriters are underpaid, work 2,000 miles away, and can’t be reached easily when needed. Nobody is going to tell you that the smiling person in your branch, your loan officer, is almost as disconnected from the process as you are and won’t be able to help when something goes south.
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