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Financial Marketing > Marketing in Banking > Flashcards

Marketing in Banking Flashcards

1
Q

What are the four key elements of marketing?

A
  • Multi-dimensional
  • involves creating value
  • focuses on tangible goods, service or an idea
  • relies on relationships
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2
Q

What are the four components of the marketing concept?

(The four P’s of the marketing Mix)

A
  • Product
  • Price
  • Promotion
  • Place
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3
Q

W

What five factors lead organizations to adopt the Marketing Concept?

A
  • A decline in sales or market share
  • slow growth
  • a change in buying patterns
  • increased competition
  • increased budgetary pressure
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4
Q

Which Act in 1980 eliminated the interest ceiling rate on bank deposits?

A

Depository Institutions Deregulation and Monetary Control Act

DIDMCA

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5
Q

What is omni-channel experience management?

A

A consistent customer service experience across all access points

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6
Q

What is the difference between strategic planning and marketing planning?

A

Strategic planning is the mission and vision of the firm
Marketing planning is the tactical methodology and plans to help achieve the vision

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7
Q

What are the five areas of customer expectation for quality service

A
  • responsiveness
  • assurance
  • empathy
  • reliability
  • tangibles
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8
Q

What is the first question that should be asked when the marketing department receives a request from another area?

A

Does this fit into our marketing plan?

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9
Q

What are the foundational blocks of a bank’s brand?

A
  • products and services
  • systems and delivery channels
  • corporate culture
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10
Q

What elements should be integrated into all marketing objectives?

A
  • Branding
  • Customer Service
  • Segmentation
  • Recency and Frequency
  • Attrition and Retention
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11
Q

What is the avarage rate of attrition at banks across the country?

A

10 - 20%

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12
Q

When looking at customer life-cycles at the bank, what four groups should they be segmented into?

A
  • new customers (3-6 months)
  • inactive tenured customer (>6 months)
  • active tenured customer (>6 months)
  • lapsed or dormant customer
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13
Q

How can banks fill a funding gap?

A
  1. Offer a promotion to generate deposits
  2. Purchase fed funds or brokered deposits
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14
Q

How is a banks financial sucess typically measured?

A
  1. Return on Assets (ROA)
  2. Return on Equity (ROE)
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15
Q

What are the three priary methods a bank makes money?

A
  • Interest Income
  • Non-interest income
  • Investments and securities
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16
Q

What is Interest income

A

interst earned form lending, usually presented net of interest expense for deposits

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17
Q

What is Non-interest income?

A

Interest gained from service fees and other charges

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18
Q

What is investments and securities?

A

Interest income generated from the investment of liabilities that exceed lending volume

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19
Q

How is ROE calculated?

A

ROE=Net Income/Shareholder Equity

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20
Q

How is ROA calculated?

A

ROA=Net Icome/Total Assets

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21
Q

What is a strong ROA?

A

Anything over 1%

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22
Q

What are the main sources of non-interest income?

A
  • debit card interchange fees
  • account service fees
  • overdraft charges
  • trust service fees
  • safe deposit box rentals
23
Q

What is ALCO?

A

asset-liability committee

24
Q

What is ALCO charged with?

A

Ensuring that the bank’s risk, funding needs, funding sources and gaps are managed effectively

25
Q

What are assets?

A

Dollars earning interest for the bank (loans) or represent capital

26
Q

What are liabilities?

A

Dollars that are owed to another source such as deposits and accounts payable

27
Q

What are retained Earnings

A

Dollars generated from operations that exceed liabilities and can be usedfor future needs

28
Q

What are some options for filling a funding gap?

A
  • increase deposit marketing
  • slow the growth of loans
  • sell a portion of the loan portfolio
  • purchase fed funds from the Federal Reserve
29
Q

What tactics can be used to increase loan demand?

A
  • Increase loan marketing
  • expand credit threshholds
30
Q

Pricing is a variable based on what eight factors?

A
  • Operations cost (overhead)
  • Funding costs (for loans)
  • Investment capability
  • term of the product
  • Competition
  • Rate environment
  • Account balances
  • Organizational goals
31
Q

What are the major fedral regulators that oversee the nation’s financial institutions?

A
  • Federal Reserve System (Fed)
  • Federal Deposit Insurance Corporation (FDIC)
  • Office of the Comptroller of the Currencey (OCC)
  • National Credit Union Administration (NCUA)
32
Q

What types of institutions does the Fed oversee?

A
  • Bank holding companies
  • State banks that are Fed members
33
Q

What types of institutions does the FDIC oversee?

A
  • State-chartered commercial banks that are not Fed members
  • State-chartered savings associations
34
Q

What types of institutions does the OCC oversee?

A
  • National Banks
  • Federally-chartered savings and loans associations
35
Q

What types of institutions does the NCUA oversee?

A

Federally-chartered and federally-insured credit unions

36
Q

What was the intention of the Community Reinvestment Act of 1977?

A

To encourage depository institutions to help meet the crdit needs of the communities in which they operate including low- and moderate-income neighborhoods consistent with safe and sound banking operations to ensure deposit-gathering institutionsare not operating in a community solely for obtaining deposits and neglecting the community’s need for loans

37
Q

The Gramm-Leach-Bliley Act of 1999 (Financial Services Modernization Act) created what benefits and challenges to FIs?

A
  • Permits banks to offer any financial service and safeguards to prevent discrimination from securities and insurance regulators
  • Federal Home Loan Banks have additional flexibility to meet increased funding needs of community bankers
  • Extended the frequency of CRA exams for banks wit less tahn $250 million in assets and an outstanding rating
  • Closed the loophole that allowed commercial companies from acquiring a bank charter
  • Provided specific guidelines for seeking, storing and sharing customer personal information - including requirements for the frequency and and timing of privacy statements and customer opt-outs
38
Q

What is the USA Patriot Act of 2001

A

The law contains strong measures to detect, prevent and prossecute terrorism and international money laundering

39
Q

What is the CAN-SPAM Act (Controlling the Assault of non-Solicted Pornography and Marketing Act)?

A
  • Requires unsoliceted commercial email messages to be labled, include opt-out instructions, and the sender’s physical address
  • Prohibits deceptive subject lines
40
Q

What is Check 21?

A

Check Clearing for the 21st Century Act
* enabled the acceleration of the transition from paper to electronic checks
* banks may now accept remote deposit ( via ATM, computer or mobile scan

41
Q

What is the Fair Credit Reporting Act (FCRA)?

A

Provides rules governing pre-screening

42
Q

What is the purpose of the Real Estate Settlement Procedures Act (RESPA)?

A
  • provide customers with understandable and uniformly presented information about the mortgage transaction and costs associated with it
  • prohibits kick-backs and referral fees between settlement service providers that result in higher costs and reduced quality to consumers
43
Q

What is the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)?

A
  • New authority to the regulatory agencies to monitor the safety of the financial system
  • Established the Consumer Financial Protection Beaurau (CFPB)
  • Increased regulation of mortgage lending and servicing by banks and non-banks
44
Q

What is Regulation C?

A

The Home Mortgage Disclosure Act (HMDA) requires lending institutions to report loan data to the public to ensure lawful lending activity

45
Q

What is Regulation DD?

A

Implements The Truth in Savings Act of 1991
* Applies to consumer deposit accounts
* Ensures consumers have comparable and consistant information to make informed decisions about deposit accounts

46
Q

When a bonus premium or gift is given as an incentive in connection with the opening or addition of a dposit account, it is not considered interest if it meets these guidelines:

A
  • can only be given to the depositor upon opening a new account or adding to an existing account
  • No more than two premiums per deposit account in a 12 month period
  • The total cost of the premium must not exceed $10 for deposits of less than $5,000 and not exceed $20 for deposits of over $5,000
47
Q

What is Regulation Z?

A

Truth in Lending
* Outlaws deceptive and unfair lending practices
* Requires banks to disclose in consistent and uniform ways the terms and cost of credit

48
Q

What is Regulation B?

A

Equal Credit Opportunity Act (ECOA)
* Forbids creditors fom discriminating before, during and after the extension of credit based on a “prohibited basis”
* “Prohibited basis” includes
* * on the basis of race, color, religion, national origin, sex, marital status or age
* * because part of the applicant’s income derives from any public assistance program
* * because the applican has in good faith exercised any right under the Consumer Credit Protrction Act

49
Q

What is Regulation R?

A

Gramm-Leach-Bliley Act retrictions on the way banks advertise; requires a bank list ALL the services it provides trust customers,

50
Q

When must insured depository organizations include a reference to the FDIC?

A

When an advertisemenr promotes deposit accounts or the services of the bank in general.

51
Q

Conversations or markeing materials about nondeposit investment products must include what information

(four box)

A

These products are:
* Not a deposit
* NOT insured by the FDIC or any other federal government agency
* NOT guaranteed by the bank
* subject to investment risk and may go down in value

52
Q

Compliance decisions should always be made with the goal of finding a solution that:

A
  • is easiest for the customer
  • meets the principles of the complianc guidelines
  • upholds the reputation of the bank in the community
  • limits the bank’s legal exposure
  • positions the bank to be a profitale venture
53
Q

What are the three core areasof financial soltions offered by banks?

A
  • retail services
  • business services
  • trust services
54
Q
A

Financial Marketing (3 decks)

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