The Power of Persistently Pointless Processes: Have You Balanced Your Checkbook Lately?

Technology historians routinely point to examples of legacy hardware design driving new products in odd ways. This “path dependence”  is often cited as a barrier to innovation and the cause of long-term inefficiency. The layout of the letters on your keyboard is a common example. This so-called QWERTY keyboard layout originally designed for typewriters is still the layout on new technologies like smartphones even though other layouts and input approaches would work better.

Photo Credit: The Club2010 via Compfight cc
Photo Credit: The Club2010 via Compfight cc

It is worth noting that new research suggests that the QWERTY keyboard was not designed to prevent jamming of the mechanical keys as the legend has it. Whatever the reason, the path dependence on the QWERTY layout for keyboard input is persistent. Technology path dependence often produces even more persistent and pointless path dependence around the processes people use with the original technology.

I recently came face-to-face with my own path dependence on a persistently pointless process – balancing my checkbook. I admit to being very slow to figure this out. I had always thought of balancing my checkbook as the sort of virtuous task that was evidence of my old-school responsible approach to financial management. The first tip-off of the shakiness of this viewpoint should have been the fact that I haven’t had an actual physical checkbook in 15 years. I expect there are some of you reading this blog post who have never seen one.

Before the internet, many of us used to record each check we wrote in a little transaction register at the back of a booklet of tear-off checks and tried to keep an accurate running total of the remaining balance in our checking account. We also recorded deposits. Then each month, we would (or know we should) reconcile our record with the Bank’s record that we received as a monthly statement. How quaint. Right? In theory, this would also help us catch any errors the bank made.

I continued this monthly ritual even as I moved to Quicken for managing my checking account.  I printed my checks on my printer, recorded my deposits after trips to the bank branch, and manually entered other transactions. As I did more of my banking online, I wrote fewer checks and most of my deposits were directly deposited. Even as I began to download the monthly transactions into Quicken from my bank website, I continued my monthly ritual of “balancing my checkbook.” There was such satisfaction in getting the checking account to balance to the last penny.

What I had missed was the total shift in the way I was actually doing my “banking.” I do 99% of my banking online. I haven’t been to a branch bank in years. I use services like Popmoney to transfer funds to my family and friends. I use services like Stripe to handle business payments. I deposit checks using my mobile phone app and camera for the few checks others send to me.

Eventually, it dawned on me that I was essentially downloading a list of transactions from the bank into Quicken each month to reconcile with a list of those same transactions that the bank sent me as a monthly statement which by the way, I was reading as a downloaded pdf file. I actually (can you believe this) had the Quicken register open on one side of the screen and the pdf monthly statement on the other to do the reconciliation. This was tantamount to having duplicate views of my bank website open in two separate windows and being thrilled when they came out with the same balance. Now THAT is some serious path dependence.

So, finally, I lovingly mothballed my years of Quicken data and began treating my online transaction register as the only thing that really matters.  I get a consolidated view of my “total spending” by using to aggregate the checking, savings, and credit cards in one place. This helps me keep track of the most important data – what we are spending our money on. I keep an eye on the cash flow electronically, but there are so many options for setting alerts that I don’t have to look at it often.

Now I can’t for the life of me figure out what the point is of having the bank send me a monthly statement. If they screwed up, I would know a lot sooner than the end of the month anyway. The whole experience makes me wonder what other “path dependencies” I have accumulated from older technologies which I could let go of and simplify my life.