Games Bankers Play: Computer Simulations Change with Industry

By Bloom, Jennifer Kingson | American Banker, September 10, 1996 | Go to article overview

Games Bankers Play: Computer Simulations Change with Industry


Bloom, Jennifer Kingson, American Banker


Generations of bankers have cut their teeth on the Stanford Bank Game and on Banksim, computer simulations that put students at the helm of a bank and force them to make decisions.

This year, for the first time in a while, new versions have been released of both games. The changes are meant to reflect more modern banking circumstances, signaling a new direction in the way bankers are trained and in the skills they must bring to their jobs.

The Stanford Bank Game, which dates back 32 years and had not been updated in eight, is owned and distributed by a private company in San Francisco. Its version 11 went out last month to 100 universities and banking schools; fresh content included derivatives, syndicated loans, and variable interest rates.

The revised game encourages students to gauge success and performance by their bank's stock price, rather than more traditional measures like return on equity.

Banksim, a competing product offered by the American Bankers Association, also has undergone a major overhaul. After three years of revision planning, the game was reintroduced in February and used this summer at the ABA's Stonier School of Banking and other major banking schools.

The changes were meant "to reflect the complexity of decisions that bankers now face in real life," said Perette Batchler, a senior training consultant for the ABA.

Ms. Batchler said the new features include "the capacity to engage in swaps" and "a private banking function, which has become big in some institutions."

Another modern reality has seeped in: "You also have the capacity to downsize, which, unfortunately, is an element that bankers have to face in today's environment," she said.

Both computer games originally were programmed for mainframe systems; both have since been changed so that they work most efficiently in Windows programs on personal computers.

And the technological upgradings have been accompanied by pedagogical improvements.

Terrence Beals, author and publisher of the Stanford Bank Game, said the traditional accounting model that the old version of his game relied on has been replaced by an "economic value model."

"Banks have to be managed for the return to the investor," Mr. Beals said, "and the traditional accounting models don't give as good a picture of that as economic value models do."

"Bankers have always measured their performance fundamentally against the performance of other banks, and that has pretty much gone down the tubes," he said. Mr. Beals' company is called Human Resources West Inc.

"Wells Fargo's takeover of First Interstate has laid down the ground rules: that the value of your stock is going to be absolutely crucial going into the future," he said.

Academics who have been test-driving the new Stanford Bank Game give it high marks.

"It's a wonderful step forward because it now brings in hedging instruments to the banking process," said Peter Rose, a banking professor at Texas A&M University. "That will allow our students to get the most updated information and to get used to the tools that every banker needs. …

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