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LIBF Finance - Unit 1 > Topic 7 - Providers > Flashcards

Topic 7 - Providers Flashcards

1
Q

How do banks raise money?

A

By selling shares

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2
Q

Advantages of banks

A
  • customers have easy access to different products and services
  • size of the bank means it can afford to invest in new products and services
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3
Q

Disadvantages of banks

A
  • customer service may be less efficient that in smaller organisations
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4
Q

What are building societies?

A

Mutual organisations owned by customers called members.

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5
Q

Advantages of building societies

A
  • all customers are members how have a say in how the society is run
  • building societies have no shareholders and don’t need to pay dividends
  • all the profits made are used to benefit the members
  • customer service tends to score higher than that of banks
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6
Q

Disadvantages of building societies

A
  • unlikely to spend the same money as banks on research and development
  • need to rely on partners to offer certain services
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7
Q

Why are building societies smaller than banks?

A
  • they tend to operate only in the UK and have a local focus
  • legal restrictions are placed on their business activities
  • there are restrictions on the amount of unsecured loans that societies can make
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8
Q

Define demutualisation

A

Where the mutual status of a building society changes to a bank.

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9
Q

What are credit unions?

A

Mutual organisations run and owned by members that share a common bond.

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10
Q

What are the potential common bonds that members in a credit union might share?

A
  • living and working in a certain area
  • working for a specific employer
  • belonging to a specific organisation
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11
Q

What products do credit unions offer?

A
  • loans
  • savings
  • insurance
  • prepaid payment cards
  • life assurance
  • the Credit Union Current account
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12
Q

What products do building societies offer?

A
  • savings accounts
  • mortgages
  • current accounts
  • credit cards
  • insurance
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13
Q

What are the advantages of credit unions?

A
  • lower operation costs
  • profits made benefit members
  • provide local and community focused service
  • inspire customer loyalty through the common bond
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14
Q

Disadvantages of credit unions

A
  • may offer a limited product range depending on size
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15
Q

What is NS&I?

A

An executive agency of the Chancellor of the Exchequer

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16
Q

What products does NS&I offer?

A
  • cash ISAs
  • savings account
  • investment accounts
  • income bonds
  • premium bonds
17
Q

How do premium bonds work?

A

Every month 2 premium bonds are selected at random to win £1 million, and there are over a million cash prizes.

18
Q

What products do the post office offer?

A
  • savings accounts
  • mortgages
  • credit cards
  • loans
  • cash ISAs
  • home and care insurance policies
  • travel insurance
  • life cover
  • pet insurance
19
Q

What are the advantages of branches?

A
  • customers can have face to face conversations with staff
  • branches can advertise all products
  • branch staff offer personal services
20
Q

Disadvantages of branches

A

Branches are expensive to run

21
Q

Advantages of online banking

A
  • 24/7 access
  • banking transactions are made immediately
  • customers can research products and make calculations using online tools
    easy to spoil for products online
  • low cost compared to branches
22
Q

Disadvantages of online banking

A
  • security issues
  • lack of personal contact makes it hard to ask specific questions
23
Q

Advantages of telephone communication

A
  • customers can contact banks 24/7
  • call centres have longer opening hours than branches
  • call centres are less expensive than branches to operate
  • customers can receive specialist advice that may not be available from a branch
  • Customers can get tailored advice
24
Q

Disadvantages of telephone communication

A
  • potential fraud
  • quality of customer service isn’t always good
25
Q

Advantages of mobile banking

A
  • quick and convenient for customers and providers to use
26
Q

Disadvantage of mobile banking

A

requires sophisticated security to ensure data remains safe

27
Q

Advantages of using post

A

Delivers a physical message that can be kept for future reference

28
Q

Disadvantages of using post

A
  • Takes time for info to arrive
  • risk of documents being lost in transit

LIBF Finance - Unit 1 (12 decks)

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