Retail Bank Marketsim Glossary

Retail Bank MarketSim Glossary

Account Opening Capability / Adding this functionality to Online and or Mobil Banking provides customers the ability to open accounts without having to go to a branch or use a smart ATM. All accounts opened through this channel are allocated to branch network. The expenses associated with this feature are the same for both Mobil and Online. Fixed Expense: $500,000 per year for each per year. Variable Expense: $1.00 per account per channel per year.
Advanced Features ATM / These ATMs are full function machines that allows customers to cash checks and get cash down to penny increments, complete all teller transactions and open accounts. Basically a teller replacement. Fixed Expense is $65,000 per machine per year. Variable Expense is $0.10 per transaction.
Advice / This feature will allow customers’ access to employees who are licensed to discuss investment strategy.
This feature is very appealing to risk-averse customer segments. However, it is very expensive to train bank employees to perform this advisory role. Fixed Expense: $100,000 per year. Variable Expense: $10.00 per account per year.
All Other Loans ($000's) / Lines and Loans Outstanding
Anchor Branch / Large branch that provides a full range of service including short to no wait times, mortgage originators and some corporate offices. Fixed Expense: $900,000 per Branch. Variable Expense: $2.57 per transaction at full capacity and $3.42 per transactions over capacity.
Annual Fee / Annual charge to the customer for owning a Credit Card, Lines of credit or Home Equity. Important to those segments that are price sensitive and with lower incomes.
Annuities / Contracts that guarantee income, often for an individual's lifetime, in exchange for a lump sum or periodic payment. Annuity contracts have a number of standard variants, including deferred, fixed, immediate, or variable. The bank earns a flat fee for any annuity product sold.
Fixed Expense: $3,000,000 per year. Variable Expense: $10.00 per account per year. Expect to earn between $80.00 and $83.00 of non-interest income per account.
Application Fee / Charge to the customer for applying for a loan. Important to those segments that are price sensitive and with lower incomes.
ATM / Automated Teller Machine
ATM Access / Feature that gives Savings Account holders the ability to get to their account balances through an ATM. No Fixed Expense. Variable Expense: $10.00 per account per year.
ATM fee off-us / Cost to the customer of using a competitor’s ATM machines
This feature is of extreme importance to price sensitive customers, particularly those with lower incomes. Variable Expense: $1.00 per transaction.
ATM fee on-us / Cost to the customer of using one of our ATM machines
This feature is of extreme importance to price sensitive customers, particularly those with lower incomes. NOTE: All income generated from non-customers using our ATM’s is captured in another unit of the bank. Variable Expense: $0.06 per transaction for Traditional ATMs; $0.02 per transaction for Cash Dispensers and; $0.10 per transaction for Advanced ATMs.
Checking / Checking products are used to meet day to day transactional banking needs. Each carries its own Fixed and Variable Expenses.
Fixed Expense per year: Variable Expense per account per year:
Basic Checking $2,050,000 $42.50
Everyday Checking $2,125,000 $47.50
Flexible Checking $2,250,000 $52.50
Personal Checking $2,375,000 $57.50
Gold Checking $2,500,000 $67.50
Premium Checking $2,625,000 $87.50
Executive Checking $2,750,000 $97.50
The names of the checking accounts have value to customers and you should assume that the difference in expense provides customers with additional benefits beyond those that can be set in the product decision section. Segments will react to the checking account names in the way that you would expect. Example: Money Moguls will react more favorably to Premium Checking than Everyday Checking.
Balance and Transaction Notification / Generates text messages to Mobile Banking customers of individual transactions and changes to their accounts balances. Fixed Expense: $500,000 per year. Variable Expense: $1.00 per account per year.
Basis / The result of dividing a figure by the larger of assets or liabilities. A useful tool in analyzing financial data.
Branches / Number of Branches
Brand Marketing / Amount of the overall marketing budget allocated to support the Brand message.
Bill Pay (Checking) / Allow customers to set up automated payments through their checking account. Bills can be scheduled to be paid in the future. Fixed Expense $100,000 per checking product per year. Variable Expense: $0.50 per account per year.
Bill Pay (Digital Channels) / Allows customers to pay bills whenever and anywhere through both Online and Mobile channels. Bills can be scheduled to be paid in the future. Fixed Expense: $250,000 per year. Variable Expense: $2.00 per account per channel per year.
Call Center / This option maintains a call center that allows a bank to take incoming calls from customers and to make outgoing calls to prospective customers. Having such a center will have a high level of cost, but with it will come great benefits: decreased branch servicing needs and greatly increased customer satisfaction.
Fixed Expense: $1,000,000. Variable Expense: $2.06 per call that exceeds Call Center capacity
Cash Dispenser / ATM that only provides customer access to funds in their accounts. Fixed Expense: $12,000 per machine per year. Variable Expense: $0.02 per transaction.
CD / A Certificate of Deposit is a deposit of funds for a specified term that earns interest at a specified rate or rate formula. For the simulated rates will be set as the average for the entire portfolio. It is against that average rate amongst other things that customer appeal will be calculated. Fixed Expense: $1,500,000 per year. Variable Expense: $10.00 per account per year.
CD Rate (Spread) / Difference between interest rate paid to customers and the interest rate the bank earns on balances.
Chat Feature / Gives the customer the ability to “text” with a branch service representative to solve problems or provide advice through either the Online, Mobile or both channels. Fixed Expense: $250,000 per year per channel. There is no variable expense associated with this feature.
Compliance Costs / Your division’s allocation of expenses associated with staying in compliance with all banking regulations and rules.
Computer access / Provide Internet access to customers’ accounts. Primarily appeals to the tech savvy segments that are busy during banking hours, have a high volume of transactions and need to transfer funds regularly.
Contactless Smart Card / A contactless smart card is any pocket-sized card with embedded integrated circuits that can process and store data, and communicate with a terminal via radio waves
Fixed Expense: $250,000 per year. Variable Expense: $5:00 per account per year.
Core Deposits ($000's) / Checking and Saving Account Deposits
Corporate Overhead / An allocated expense assigned to your division by the bank to cover the cost of shared systems, other infrastructure and executive management.
Credit Card / A line of credit account that authorizes draws through a card. Variable Expense: $1,500,000 per year. Variable Expense: $35.00 per account per year.
Credit Card Receivables ($000's) / Credit Card Balances Outstanding
Customer Satisfaction (Compiled by CSI) / Customer Satisfaction Survey Results—Computer calculates how well your decisions in sync with your targeted customers.
Customer Turnover Ratio / New customers divided by customers lost.
Delivery: Customer Satisfaction / Customer Satisfaction of the quality and quantity of branches and ATMs.
Delivery Costs / Sum of distribution; branch, ATM and service costs
Deposits / Total Deposit Balances
Direct Mail / A marketing effort that uses a mail service to deliver a promotional printed piece your target audience.
Earnings / Net Income
Efficiency Ratio / Non-interest expense divided by net interest income before provision plus non-interest income.
Entertainment Bundle / This bundle gives owners: access to on demand movie streaming, membership in a popular wholesale club, special offers based on where the owner is and early access to purchase tickets to events nationwide. This bundle costs $150,000 in fixed expense and $9.50 per account.
Event Advertising / A themed activity, display, or exhibit such as a sporting event, music festival, fair, or concert to promote a product, cause, or organization. Sometimes includes endorsements from national or local celebrities.
Executive Bundle / This bundle offer the best items of the other 3 bundles in one high end package: Mobile phone protection, Roadside Assistance and Entertainment Concierge are a few of the services offered. This bundle costs $100,000 in fixed expense and $13.25 per account.
Fee for falling below minimum balance / Monthly fee charged for checking accounts that do not meet the minimum balance requirement.
Fee per transaction / The fee the customer pays for every check written or branch generated transaction. This feature is of extreme importance to price sensitive customers, particularly those with lower incomes. Each transaction carried a Variable Expense charge of: $0.15 per transaction
Fee per trade / Cost to the customer for executing a trade. This is the feature with the highest leverage in the account. Low priced trades are most appealing across all segments; however, certain segments may be willing to pay up for higher priced trades if there is a perceived corresponding value delivered along with the trades in the form of advice, etc.
Fees / Fee Income Received
Financial Position (Compiled by MarketWatch) / Your bank’s Financial Position relative to the other banks in your community.
Financial Steward Bupdle / For those customers who want to take control of their finances, this bundle provides credit score monitoring, budget & retirement planning and access to basic legal services This bundle costs $175,000 in fixed expense and $7.00 per account.
Fixed Costs / Fixed infrastructure costs for offering products; costs not impacted by volumes.
Fraud / Fraud protection protects customers from being liable if their credit cards are stolen. This feature appeals to risk-adverse customer segments. Fixed Expense: $25,000 per year. Variable Expense: $10.00 per account per year.
Full Service Branch / A branch that offers all of the products and services available at the bank and is staffed to provide enhanced service to its customers. Fixed Expense: $774,000 per branch. Variable Expense: $2.46 per transaction at full capacity. $3.27 per transaction above full capacity.
FTP – Funds Transfer Price / The index created by your bank’s treasury department on which product pricing is based.
HE Limit / Maximum amount that customers are allowed to borrow on their HE line of credit. This feature is important to all customers segments; more affluent segments may be only willing to use the product if the limit is high, while segments with lower incomes will be wary of their ability to qualify for products with higher limits.
HE Risk / Bank management can adjust its appetite to the amount risk to earnings or capital from the potential that a borrower will fail to perform on a Home Equity obligation.
High paid reps / Employ knowledgeable reps that have enhanced product knowledge and have a great sales record.
This will increase the quality of call center service. It is very expensive, but it will lead to truly world-class call centers. If consistent with a servicing strategy, it will greatly increase customer satisfaction. This feature will add capacity to you call center. Fixed Expense: $200,000 per year.
Home Equity / A line of credit secured by real estate.
The bank, due to systems constraints, in unable to provide access to the line through a credit card. Fixed Expense: $2,000,000 per year. Variable Expense: $150.00 per account per year.
Insurance / Coverage by contract where the insurance company guarantees another against loss by a specific act or contingency.
The bank earns a flat fee for any insurance product sold; homeowner, auto or life. Fixed Expense: $2,750,000 per year. Variable Expense: $5.00 per account per year. Expect to earn between $63.00 and $65.00 on Non-interest income per account.
Integrated Systems / Investment in technology that allows call center employees the ability to see all accounts and balances of a customer on a single screen as well as the ability to access all the customer’s in formation without having to log in and out of multiple platforms. This feature will add capacity to your Call Center. Fixed Expense: $200,000 per year. There is no variable expense with this service.
Interest Bearing Assets / Sum of balances in loan products
Interest Bearing Liabilities / Sum of balances in deposit products
Internet Advertising / Advertising and marketing efforts that use the Web and email to drive direct sales via electronic commerce, in addition to sales leads from Web sites or emails
In store Branch / These branches reside within grocery stores and other businesses. They provide access to the bank’s full range of products and services, but in a very different environment. Fixed Expense: $600,000 per branch. Variable Expense: $2.40 per transaction at full capacity. $3.19 per transaction above full capacity.
Investments / An account that allows customers to invest in products such as stocks, bonds, property, government and municipals for long-term savings or retirement. Fixed Expense: $1,000,000 per year. Variable Expense: $75.00 per account per year.
Limits / Maximum amount that customers are allowed to borrow on their credit cards. This feature is important to all customers segments; more affluent segments may be only willing to use the product if the limit is high, while segments with lower incomes will be wary of their ability to qualify for products with higher limits.