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CFMP > 1 > Flashcards

1 Flashcards

1
Q

Delivery channels

A 
branch
online banking 
website
mobile
desktop
email
sms
direct mail
paper
radio
phone
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2
Q

product insights

A 
checking
savings
loans
mobile banking user
insurance or investments
high or low balances
debit or credit card user
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3
Q

demographic insights

A 
age
sex
geography
marital status
employed\income
homeowner
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4
Q

3D advertising approach

A

be unique
have value
be seen

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5
Q

place distribution stop

A

is mainly concerned with making the product available at the desired time and place

2 important elements of distribution strategy for bank
location & ease of access

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6
Q

inbound link

A

is a hyperlink back to your site from another website

ex. schools, chambers, social media channels

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7
Q

digital marketing

A

the act of understanding, reaching and engaging with your audience online . often through social media

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8
Q

competitive profile

A

banks marketing decisions must take into account -
competitors marketing strategies (product offering, pricing, hours, delivery channels &. services) and their likely reactions to the banks own marketing activities

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9
Q

market place profile

A 
provides management with the info it needs to identify potential challenges and opportunities in both retail and business markets
defines trade area
population data
housing trends
new business developments
demographic info in geography areas
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10
Q

market research

A

in a investigation of what had been defines as the market

in short its the acquisition and use of information that can be beneficial to the marketing management process. Its the transformation of info, turning raw data into compelling about bank’s customer, market and competition

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11
Q

marketing concept

A

an approach to business that makes marketing a central element of the business; a methodology that enables all of an organizations divisions to focus their efforts on activities that satisfy customers needs by providing them with products and services they want and that earn appropriate margins for the company and its shareholders

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12
Q

closed end credit

A

credit for a special purpose and for a fixed amount that is established at the beginning of the transaction, to be repaid in on or more regular payments over a set time

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13
Q

AIDAS formula

A

5 successive stages of consumer responsiveness in the selling process
A - Attention - gain prospects attention
I- Interest arouse interest
D- Desire stimulate desire for a product
A- Action get buying action
S - Satisfaction build satisfaction into the transaction

over simplistic because the sales person can control the behavior of the prospective buyer is the process is managed skillfully

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14
Q

bank’s internal publics

A

bank has some control over the reception other its communications to them

example of internal publics:
employees, directors, customers and shareholders

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15
Q

bank’s external publics

A

bank does not have control over the message and when it will be received

external publics: investment community, the community served by the bank, consumer groups, community action groups, organizations receiving corporate contributions, govt officials a

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16
Q

4 elements that media and consumers expect from a bank dealing with a crisis

A
  1. describe the risk accurately
  2. describe the actions the bank will take to mitigate the risk
  3. identify the cause of the risk
  4. demonstrate responsible management actoion
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17
Q

investor relations

A

involves communicating wit the banks shareholders, potential shareholders and those who have the ability to affect the activity in, and price of, the bank’s stock

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18
Q

4 basic elements of effective advertising

A

headline
illustration
copy
signature

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19
Q

search ads

A

pull approach

see your ads because they were already looking for your bank’s products or services

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20
Q

display ads

A

push approach

people usually see display ads because they were targeted while reading a piece of content, watching a video, checking email, or browsing web

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21
Q

quality score

A

google ad words

quality score is an estimate of your ads, keywords and landing page. Made up of expected CTR, ad relevance & landing page experience
1-10 10 is highes

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22
Q

ad extensions

A

a way to expand your ad with additional info, giving people more reasons to choose your business

ie, call buttons, location info, links to specific pares of your website

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23
Q

negative match

A

exclude negative key words

ie -bad credit

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24
Q

broad match modifier

A

only shows words designated with a + sign

ie +bank accounts

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25
Q

broad match

A

is the default match type that all your key words are designed. Ads may show on searches that include misspellings, synonyms, related searches, and other relevant variations

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26
Q

keywords

A

are words or phrases describing your product or service that you choose to help determine your product or service when and where you ad can appear

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27
Q

ad group

A

contains one or more ads which target a shared set of key words. You set a bid or price to be used when ad group’s keywords trigger an additional ad to appear. Also called CPC bid, You can also set prices for individual key words within an ad group

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28
Q

sample

A

a small number of individuals scientifically selected from the general population, whose opinions, preferences, and characteristics are representative of the group as a whole

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29
Q

sales promotion

A

any device (other than advertising, public relations, and personal selling) that provide an incentive to the customer to purchase goods or services. For example: cents off coupons, premiums, in store displays

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30
Q

service

A

an intangible activity or benefit performed by a business that satisfies a consumer need. In banking this term is often used interchangeably with a product

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31
Q

skimming price

A

setting a high initial price for a product to attract the “cream” of the market. Consumers who will buy regardless of the price

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32
Q

source of funds

A

an activity that generates deposits of lendable money

deposits
fed funds

liability on balance sheet

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33
Q

premium

A

cash or merchandise that a business gives away or sells at a discount as and incentive to purchase a product

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34
Q

penetration pricing

A

setting a low initial price in order to attract a large market share quickly

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35
Q

open end credit

A

a specified amount of credit available for use at the customers discretion; repayment ranges from interest only through minimum state amounts to a percentage specified in the contract

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36
Q

foundation of situation analysis

A

3 basic profiles:
customer profile
market place profile
competitive profile

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37
Q

product

A

a product is anything that can be offered to the market for attention (public relations acquisition, use, or consumption that might satisfy a want or a need.
Kolter

Is a key element in the marketing mix for two reasons:
1 The product is the firms reason for being
2 All other elements of the marketing mix revolve around the product

From a marketing point of view a product has 5 different aspects
1 the core product (benefit)
2 the generic product
3 the expected product
4 the augmented product
5 the potential product
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38
Q

captive financing

A

financing offered by the manufacturer & related entities directly through the dealer

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39
Q

7 Cs of today’s market place

A 
connectedness
conversations
community
collaboration
convenience
confirmation
conversion
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40
Q

rates

A

what you pay for deposits impacts loan pricing answers effects margins

FHLB borrowings also has effect on margins

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41
Q

current rates

A

LIBOR - London Inter-Bank Offered Rate- interest rate average used to determine bank interest rates

Fed Funds- interest rates bank charge one another to borrow term money and is set by the Federal Reserve

Prime Rate - interest rates commercial banks charge their most credit worthy corporate customer often serves as a starting price for other rate pricing and is based on of Fed Funds overnight rates

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42
Q

largest revenue component for a bank

A

net interest income

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43
Q

pricing

A

determinant of profitability, revenue, and expenses and also affects the demand the level of demand for a product or service.

ex. if a loan is priced too low and the demand is very high the revenue (margin) may be lower than expected. If a deposit is priced too loan, the demand may far less than anticipated, and the balances generated may not meet the funding needs of the bank

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44
Q

risk management program

A

measures, monitors and controls inherent risks

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45
Q

factors that affect elasticity - price sensitivity

A 
existence of close substitutes
consumer awareness of price difference
length of time price difference persists
Range of use
significance & frequency of purchase
non price benefits
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46
Q

price elasticity of demand

A

as the price increases the demand decreases of diminishes. But demand might diminish very quickly or verly slowly in response to the increase. When the response is quick the demand is elastic. When the response is slow the demand is said to be inelastic

the degree to which demand for a product decreases as the price for it increases

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47
Q

product mix strategies

A

Product mix -full range of products offered by sale by the bank. Could include more than 100 different product related services.

Product mix strategies- 
Product expansion
Product contraction
Product modification
Product repositioning
Trading up or down

Ignore photo

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48
Q

incremental financial value

A 
revenue can be determined by:
incremental gain on interest income
incremental gain in investments
incremental gain of deposits
additional fee income
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49
Q

adverstising

A

goals is to inform, influence, persuade the target market to respond or act

product advertising focuses on selling a specific product or service

any form of communication paid by a sponsor for the purpose of informing and persuading the target market about products, services, organizations or ideas, by using advertising, an organization can control what is said about its products and services and when and where it appears

institutional advertising focuses on an image or brand

paid takes place through print, broadcast, out door, electronically

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50
Q

personal selling

A

is defined as one on one contact between a seller’s representative and a potential buyer to arouse interests and convince the buyer tor purchase

lays ground for long term relationships

matches needs with products and services

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51
Q

selling - AMA defitintion

A

The personal or impersonal process where by the salesperson ascertains, activates, & satisfies the need of the buyer to mutual continuous benefit of both buyer and seller

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52
Q

Theodore Levitt distinction of marketing and selling

A

selling is finding customers for what you have, marketing is making sure you have what customers want

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53
Q

qualitative data

A

info collected through in depth interactive interviews of a smaller number of consumers. This method is effective for determining basic needs, desires, and reactions to new product concepts and for identifying issues to be measured through quantitive research

sentiment
buzz volume

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54
Q

macro environmental factors

A 
economic
demographic
social and cultural
political
legal and regulatory
technological
natural
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55
Q

micro environmental factors

A 
banks customers
competition
markets
producers
suppliers
publics
Marketing intermediates

Bank has very little control over micro environment

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56
Q

revenue generation method of budgeting

A

This method is gaining prominence as a means to evaluate a marketing budget on the basis of how likely it is likely to affect the bank’s ability to generate revenue.

attempts to quantify the impact of marketing on 4 key areas
Account acquisition 
account retention
account balances
account usage

helps bank marketer communicate the financial contribution to the marketing function and also present a case for the most effective use of capital. In essence the marketer is preparing an “impact analysis” for the marketing investmeant (budget) and attempting to determine an ROI or ROMI for the proposed budget.

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57
Q

The Management process

A
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58
Q

retained earnings

A

represent dollars that have been generated from operations that exceed liabilities that can be used for future needs

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59
Q

marketing aggregation aka undifferentiated marketing

A

avoids segmentation all together and target the mass market with a single offer

banks do when they build brand awareness campaigns

most often found in industries ie Morton Salt says when is rains it pours

Leads to low penetration

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60
Q

SERP - search engine results page

A 
made up of:
sponsor ads
organic listings
site links
locations
maps
reviews
social channels
news and other related search queries
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61
Q

declining rate environment

A

asset sensitive bank-
loans will reprice faster than liabilities

liability sensitive bank-
deposits will reprice faster than loans and investments

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62
Q

source of funds

A

deposits and fed funds

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63
Q

untimely brand equity is determined by

A

customer

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64
Q

uses of funds

A

is an area that requires money

loans
investments

asset on balance sheet

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65
Q

ALCO

A

The committee charged with ensuring the bank’s risk, funding, needs, funding sources, and game are effective managed

Made up of : CFO , CLO, CMO, retail banking leader, business banking leader and sometimes leaders of trust/investments

assesses sources and uses of funds 
loan pipeline funding needs
deposit and loan concentrations
growth prospects
general market and economic sentiment
product/market expansion
product design
rate sensitivity effects for deposits and loans

concerns:
how to position bank in rising rate environment, demand rate environment, when it needs loan dollars, when it needs deposit dollars

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66
Q

direct marketing

A

is a term used to identify sales and marketing activities utilized to develop, offer, and deliver new financial services directly to customers and prospects

removes intermediaries in the delivery of the product or service

ie- invitation to apply

Important elements that contribute to the success of direct marketing:

  1. Accessible and user friendly customer info and the related understanding of the customer account possessions and purchase behaviors
  2. Competitive products and offers
  3. Effective communications
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67
Q

expected product

A

includes the product features that customers assume will be part of the product, ie - prompt and accurate payment of checks, accurate monthly statements

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68
Q

augmented product

A

includes all of the specific features and benefits that help the marketer differentiate the product from its competitors

Banking products are augmented by the level and quality of the service provided to this customer, the bank’s reputation, the staff’s experience and knowledge and so on

ie- packaged product accounts such as no annual fees, lower loan rates, and bonus rates

Razor example - the augmentation attempts to distinguish one generic product from another

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69
Q

generic product

A

provides benefit of core product

ie-checking account

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70
Q

generational segmentation

A

must take into account the demographics (typically age) of the segment and their behavior and commonalities (typically physiographic tendencies) to the most relevant to each generations

defined by a period of time in which they matured

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71
Q

objective of market segmentation

A

*identify a specific group of people and then pursue it with a tailored mix of product, pricing, promotion and distribution
*must be measurable, accessible, and substantial
must be possible to measure the purchasing power of the market segment
must be feasible to reach member of segment through advertising
must be substantial or sizable enough to generate a profitable volume

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72
Q

market segmentation

A

aggregating people into groups (segments) that have a common needs and will respond similarly to a marketing action

recognizes the wisdom on providing specialized opportunities that suit the needs of a specific of the overall market rather than trying to be all things to all people

objective of market segmentation:
to id a specific group(s)
pursue it with a tailored product
supported by appropriate pricing, promotion and distribution strategies

homogeneity- common need within segment
distinction- unique from other groups
response- similar responses to marketing

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73
Q

benefit segmentation

A

builds its strategy around the delivery of a specific benefit

ie- bank targeting the wealthy achievers segment, might offer after hours appointments with private bankers, educational se

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74
Q

lifestyle and generational segmentation

A

strive to understand the fabric and background of a group of people and the effects that live events have on their outlook and financial product utilizations

influences that customer’s years of maturation have on outlook

incorporates influences such as world and local event that contributed to the groups during their formative years ( demographics and psychographic)

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75
Q

target market selection

A

target should be consistent or compatible with banks goals
be consistent with its resources
should seek markets that will generate not only volume, but profitable volume
target market for which the number and size of competitors is small

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76
Q

business market segments - commercial banking markets

A

3 most used in business market
geographic
sales volume
industry segmentation

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77
Q

concentrated marketing

single segment marketing

A

the marketer selects one target market and develops one marketing mix strategy to address it.

enables firms to penetrate ,market deeply and to develop a reputation as an expert

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78
Q

demographic segmentation

A

categorizes market in terms of population characteristics, such as age, sex, income, occupation, and position for life cycle

ex-establishes a professsional banking group targets at an occupation segment

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79
Q

Geographic segmentation

A

divides the market according to geographic units . A firm may decide to market different products in different areas or to markets products in certain areas and not in others

ex debit cards and cds, where to locate a new branch or LPO

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80
Q

volume segmentation

A

refers to the marketer’s attempt to distinguish heavy, medium, and light users of a product.

in many businesses a small proportion of users will generate a large portion of sales

Pareto principal - 80% of profits come from 20% of customers

use to send different message

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81
Q

campaign

A

is a set of ads, keywords and bids that share a budget, location, targeting and other settings.

Campaigns are often used to organize categories of products or services that you offer

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82
Q

SEM - Search Engine Marketing

A

The process of gaining traffic and visibility from search engines through paid efforts

often referred to as Pay Per Click PPC

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83
Q

influencer

A

people and organizations who have purported expert level knowledge of influence in their field

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84
Q

influencer marketing

A

is a form or marketing that involves endorsement and product placements from influencers.

partnering with trusted personas, leaders, or voices in a particular field that provide reviews, endorsements or recommendations of brands and products

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85
Q

content marketing

A

is a strategic approach focuses on creating and distributing valuable, relevant and consistent content

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86
Q

net promoter score

A

asks single questions of a customers “how likely are your to recommend this company to a friend or colleague? scale of 1-10
customer with 9-10 ratings are promoters; 7-8 passives, 0-6 detractors

% promoter -% of detractors= net promoter score

know net promoter score can help improve customer service and help determine and create processes to improve

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87
Q

primary data

A 
customer data
POS
intercepting customers after transactions and asking a short series of questions
group discussions
personal interviews
surveys
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88
Q

external secondary data

A

info from regulatory agencies, ABA, Federal, State and Local Govt, & media

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89
Q

3 elements of collecting data

A

selecting a survey method
designing a questionnaire
fielding the study

90
Q

intercept interview

A

often conducted after completion of a transaction
stopped in bank lobby
effective way to gather qualitative info

91
Q

goals of advertising

A

to stimulate awareness and use of profitable products and services

to achieve a diversified financial base by attracting a steady influx of new customers

to promote special events

to promote a favorable public reaction to the bank and issues affecting the bank

Should be incremental, measurable, specific and fully communicated to all parties

92
Q

publics

A

are simply the audiences with which the organization is attempting to communicate; most organizations have many publics

93
Q

marketing vs public relations

A

marketing focuses on revenue generating activities

public relations focuses on non-revenue generating activities

94
Q

paid communications

A

include TV, radio, newspaper, online, marketing collateral

95
Q

public communications

A

include: articles written about bank. printed press releases and commentary by TV and radio personalties

96
Q

public relations as defined by Public Relations Societyof America

A

public relations helps organization and its publics adapt mutually to each other

97
Q

marketing intermediaries

A

a third party that helps the seller promote and distribute the products to the consumer

98
Q

complaints

A

any written or verbal communication expressing dissatisfaction with your banks products or services

May be shared with regulators.
possible violation of law

Risk to bank: reputational, financial, limit ability expand

99
Q

complaint management process

A 
complaint 
acknowledge
investigation
resolution
communication
100
Q

responding to complaints

A

provides feedback to the customer regarding the complaint

opportunity to improve client relations and perception of bank

can improve team skills and awareness through training

101
Q

focus group

A

a discussion among 10-12 people who are representative of the target audience and who are led by an experienced moderator

excellent resource to receive feedback, however scope is limited to small group

generates excellent subjective observation about products and delivery channels

identify topics that require additional discovery

102
Q

surveys

A

primary method used to collect primary data

103
Q

CTW

A

click to website

104
Q

UTM tags

A

urchin tracking module

email banners, display ads

105
Q

promotion mix

A 
the unique combination of 4 promotional activities that in profitable demand for products
advertising
sales promotion
public relations
personal selling
106
Q

strategic planning

A

The vision, mission of the business, defining its existence and purpose. Strategic marketing planning complements the organizational strategic planning

107
Q

price

A

what must be exchanged in return for receiving a good or service

108
Q

new product development

A

Most new products developed by banks are new to the bank but not new to the banking market.

This type of “new” product development falls into one of four categories:

  1. Modification of existing products - new cd during rising rates “rising rate cd”
  2. Extension of a product line - development of a lifeline checking for low income cust
  3. Development of a banking related product - start sell of annuities or mutual funds
  4. Diversification into new product categories - expand into not traditional banking services

New Product Development Process and Stages

idea generation- screening out ideas that are not viable or likely to succeed
concept testing -is a function of marketing research
business analysis to forecast sales and profit
product development
Product testing and test marketing to determine customer acceptance
Implementation and commercialization of the new product
evaluation

109
Q

primary data

A

data collected from original sources for a specific. Findings based on answers to questionnaire administered to individual customers or prospects are and example

110
Q

marketing mix

A 
the combination of 4 marketing activities
product development
pricing
promotion
(Place) distribution

aimed at satisfying demand in the target market

111
Q

marketing objective

A

a written statement giving directions to an organizations short term product, pricing, promotion, and distribution decisions

112
Q

6 steps of market research

A 
define the problem
planning and designing the research project
collect data
analyze data
report the research findings
integrating the data into planning
113
Q

marketing objective

A

identifies desired direction
a broad statement ot direction
can set the tone and theme for all groups in the bank
can be supported by many goals or just one

114
Q

marketing goals

A

specific result
should address specific measurable results that are attained in pursuit of a broader corporate or financial
may focus on a particular product line
goals should be carefully thought out to support and help attain marketing objectives

Marketing goals should possess the following 5 characteristics:

  1. They should be measurable
  2. The should complement the bank’s financial goals
  3. They should be appropriate for the level of the job
  4. They should be flexible
  5. They should stretch the bank and each department to achieve excellence
115
Q

strategy

A

describes the route the bank will take to reach its destination
What will be done

116
Q

tactics

A

outlines the specific actions to be taken, who is to take them, when and what cost

how it will be done

117
Q

marketing planning process objective and goal

A

objective- will be used to identify a desired direction for results - a broad statement of direction

goal will represent the specific result

118
Q

action plan

A

is made up of strategies and tactics

119
Q

compliance

A

the interpretation and application of banking laws, regulations and guidelines

120
Q

legislation

A

the act or procedure of making laws

121
Q

types of compliance related risks

A 
compliance risk
legal risk
reputational risk
financial risk
organizational risk
strategic risk
122
Q

FFIEC 3 areas of social media risk

A

compliance/ legal
reputational
operational

123
Q

product focus

A

when focus is directed to a product offering or a line of business offered by the bank (target product)

124
Q

product life cycle

A 
the relative state of the product in terms of
introduction
growth
maturity
decline

more promotion elements may need to be used when its is initially launched and again at the maturity stage

125
Q

introduction state of product life cycle

A

characterized by slow growth in sales as the product is introduced and the market gradually becomes aware of it. Profit curve shows a loss because of heavy expenses incurred introducing the product, in addition to development and advertising

126
Q

growth stage of product life cycle

A

acceleration in sales as more people become aware

attracts competing firms to enter the market

ex HELOC

127
Q

maturity stage or product life cycle

A

the profitability of a product in the growth stage attracts intense competition as the maturity stage approaches

maturity is characterized by a slowed rate of growth as most prospective buyers have purchased

Aggressive advertising

ie, checking account, debit card

128
Q

decline state of product life cycle

A

when total sales of a product take a marked downturn the product has reached the final state of the product life cycle

ex. savings accounts because of MMA, also social changes - brick and mortar

characterized by fewer firms offering the product, reduced promotion and restricted variety of product offering

129
Q

swot analysis

A

strengths
weaknesses
opportunities
threats

130
Q

competitive strategy

A

identifies and defines its competitive advantage for the purpose of creating and sustaining superior performance

It describes how the organization differentiates itself in a numbers defined market place

it is a critical document because every decision the bank makes relate to its marketplace and its customers should reflect the competitive strategy

131
Q

core values

A

are at the very heart of the organization, and they act as the anchor for the bank

represent the true personality of the bank

reflect the attributes that are considered priorities in the daily operation of the business. In banking, organizations often identify as strength, stability, integrity, customer-focuses, honest and respect as core values

132
Q

mission statement

A

governs the overall direction and purpose of the bank. A mission lends a bank its unique identity and differentiate it from the competition.

outlines what must happen to realize the company’s vision. a brief statement of why organization exists and the purpose of the organization

may include references to exceptional customer service, meeting the needs of the trade, provind a fair return to share holders, etc

objectives and goals support the mission statement
changes very little over time
corporate, financial,, and marketing objectives should support the mission statement

133
Q

vision statement

A

sets tone and overall stage for how the bank is and will operate

134
Q

corporate direction

A

is usually affirmed by the organizations vision statement, mission statement, core values, competitive advantage and brand expectations (sometimes referred to as brand promise)

135
Q

brand

A

the banks brand reflects the competitive advantage defined in the competitive strategy

what customer and businesses in it’s trade area think about the organization

direct - one on one contact with bank employee, bank sponsored event or account opening
indirect - advertising, community sponsorships, anything that carries brand identity in the market place

136
Q

what the MOST aspect of a bank’s brand?

A

building credibility and equity

137
Q

bank’s vision

A

a bank’s vision should focus on the future and represent a picture of the desired destination or a realistic dream for intended pursuit

vision statement example: Become the largest employee owned bank in an area

138
Q

branding

A

process by which the bank seeks to influence the marketplace so they feel a certain way about the brand.

Its an influential effort that is based on a single idea of what the brand represents, stands for, and means to both the bank and the market place.

connect emotionally and creates a memorable experience

139
Q

objective and task method

A

budget is based on what it will cost to achieve objective and goals of the organization

This method is more complex to implement but is effective over time

Most rational

140
Q

competitive parity method

A

bank determines what competitors are spending and following their lead

essential lets competitors determine budget

It fails to take into account the effects of variations on creativity, different uses of media, the various internal capabilities( or lack of capabilities) from institution, timing of campaigns, and a bank’s image and recognition level in its market.

141
Q

incremental method

A

a bank increases budget by a certain % each year

based on inflation, growth rate of bank

May be dictated by a planner or budgeted whose primary objective is to make the bottom link show a targeted ROA

Assumes that market and competition are likely growing at rate of inflation

This does not encourage the marketer to question the technique being used or to take a fresh look at objectives

method does not factor in tasks and objectives to meet goals

142
Q

% method

A

Flawed because it is based on past performance rather than objectives for the future- based on current assets and not where the bank is heading.

ie 1/10 of 1% of total assets

1 billion $ bank = 1 million on marketing spend

143
Q

omni channel management

A

optimizing customer experience

compels the organization to provide consistent product and customer service no matter where their customer journey begins

144
Q

mystery shops

A

provides highly target, first person assessment of employee behavior

repeatable process that can be used throughout organization and can be used to track performance trends and even set goals for ongoing service levels

145
Q

RACE Model. KPIs

A

Reach- visitors, impression, fans

Act- leads, shares, time on site, do video views, comments

Convert - enrollment, open accounts, closed loans

engage- referrals, repeat business, share of wallet

146
Q

frequency

A

the average number of times an advertising message reached the same person or household during a defined period

How often a target has received communication from the bank

147
Q

reach

A

total number of people exposed to a given media at any given time

148
Q

liabilities

A

a source of funds that the bank must repay on request

are the debt or borrowings of the bank - deposits, FHLB borrowings

balance sheet

149
Q

assets

A

use of funds - loans &investments which represent money due to bank

balance sheet
earning assets generate revenue
non earning assets
ALLL - a contra asset (negative balance items) reserve for loan loss

150
Q

income statement

A 
interest income
non interest income
realized gain on securities
non-interest expense - salary, benefits, premises, fixed assets, other non-interest exp
income taxes

net income

151
Q

balance sheet

A

3 main components
assets
liabilities
retained earnings and equity

152
Q

loan to deposit ratio

A

=loans/deposits

assesses bank’s liquidity
standard 90-92%
you have to have enough liquidity to survive if rates change

current deposit rates are driven to fund loans and lower cost deposits the better margin and return you will have on loans

closer to 100% you will have to borrow funds and that impacts your margins

high= strong loan growth and increase on interest income

low= deposit growth is strong and indicates lower interest income

153
Q

voice of customer

A

customer centric

relevant to capture gaps and needs of customer

improve satisfaction, product delivery, loyalty and revenue

Ways to capture VOC: customer interviews, mystery shops, focus groups, advisory boards, app feedback

Important insights:
Why did customer select your bank?
What can you do to make their. Experience better?
Are they likely to recommend you?
Transactional behavior patterns
Preferred banking and communication channels

154
Q

share of voice

A

is a measure of the market your brand owns compared to competitors

acts as a gauge for your brands visibility and how you dominate a conversation

paid share of advertising

155
Q

RAROC - risk adjusted return on captial

A

-capital allocations

based on how much risk is involved

156
Q

payback

A

calculation determines whether the results warrant investment in the specific marketing program and its the heart of ROI & ROMI

determines whether the return generated over time by a specific makes the expected return

157
Q

5 ways to improve profits

A 
increase interest income
reduce interest expense
reduce risk and therefore provision and capital allocation
increase fees
reduce operating expense
158
Q

as banks get larger….

A

balance sheet moves slower - you have to manage the trends of the balance sheet

recognize that loan demand is growing faster than deposits

tailor marketing campaign where you need it at bank

159
Q

two types of reporting to leadership

A

strategic reporting-
connect strategic objectives
map strategic goals - SMART goals
KPIs or balanced scorecard

Campaign reporting
ROI
Dollar returned per marketing dollar spent

160
Q

physiographic segmentation

A

involves classifying the market in behavioral terms according to lifecycle, life style , or personality
profile

young professionals on fast track for debit and cc sales

conservative consumers who want to protect their savings by marketing five year fixed rate investments

161
Q

ECOA - Equal Credit Opportunity Act

A

Reg B

blanketed under “Fair Lending”
cannot discriminate on a “prohibited basis”

race, sex, color, age, religion, national origin, marital status, receipt of public assistance, rights under CCPA

162
Q

Fair Housing Act - FHA

A

blanketed under “Fair Lending”
applies to residential loans
prohibits discrimination: race, sex, color, religion, national origin, handicap, familial status
requires Equal Housing Logo

163
Q

HMDA - Home Mortgage Disclosure Act

A

Reg C

requires banks to report loan data to the public

primary to assure CRA compliance and Fair Lending Laws

164
Q

Real Estate Settlement Procedures Act - RESPA

A

Applies to RE secured loans

prohibits practices such as kickbacks and referral fees between settlement providers, which result in higher cost and reduced quality to consumers

provides consumers with uniform and understandable info about RE mortgage transactions and costs

165
Q

Truth in Lending - TILA

A

Reg Z

helps consumers make informed decisions about credit by requiring consistent and uniform disclosures of terms and cost of credit

outlaws lending practices

outlines needed disclosures to properly inform customers

consumer loans only

166
Q

Fair Credit Reporting Act FCRA

A

prescreening credit reporting agencies for email link

permits sharing of transaction or experience info with affiliated companies regardless of which had firsthand experience with customer (as long as you pay for it)

167
Q

Fair and Accurate Transaction Act - FACTA

A

must give notice of customer before use of credit

allow to opt out

it restricts how info can be used (not share)

168
Q

Controlling the Assault of Non-Solicited Pornography and Marketing Act - CANSPAM

A

CML emails labeled
opt out options
senders physical address
no false headers

169
Q

Do Not Call

A

prohibits calls to customers on the registry, unless they have an established relationship

business relationships: transacted business in last 18 months, application in last 3 months

check registry monthly

170
Q

ADA

A

physical buildings
ATM/ITM
website - audio/video
applies to public accommodations, employment, telecommunications and public services

171
Q

Dodd Frank Wall Street Reform and Consumer Protection Act

A

created in response to the economic crisis of 2006-2009
office of thrift supervisions was replaced by Federal Reserve for savings and loan holding company supervision, and Office of The Comptroller of the Currency for Federal savings institute supervision

strict controls on larger bank holding companies ($50+ total assets) and systematically non-bank financial companies

established CFPB

responsible for consumer protection laws except CRA

mortgage originators must act in the best interest of the consumer and their ability to repay the loan

172
Q

Gramm-Leach Bliley Act - GLBA

A

Reg R

permits banks to provide new business lines and consumer services-stock, brokerage, insurance

frequency of CRA exams less than $250mil and outstanding rating, pushed to every 5 years

prohibits approval of unitary thrift as of May 4, 1999

safeguards customer information PII, 3rd party opt out options, sharing of privacy statements

Reg R may broadly advertise trust and fiduciary services. Cannot advertise on a stand-alone basis that is Security Brokerage Services

173
Q

Unfair, Deceptive, or Abusive Acts or Practices

A

UDAAP

injury cannot be reasonably avoided by the consumer

is deceptive to a person reasonably acting

considers audience

takes advantage of lack of understanding

174
Q

USA Patriot Act

A

strong measures to detect, prevent, and prosecute terrorism and international money laundering

Included revisions to BSA

Requires banks to have a CIP. Compare customer names to those on government lists of know or suspected terrorist/organizations

generally, applies to insured depository institutions and US branches and agencies in foreign countries

175
Q

Member FDIC

A

all insured depository organizations include “FDIC” when an ad promotes deposit accounts, services for bank itself

does not include advertisements of non-insured specific products

176
Q

Truth In Savings Act - TISA

A

Reg DD

ensures that consumers have comparable and consistent formatted info to make informed decisions about accounts at banks

non commercial deposits

advertising cannot be misleading, inaccurate, misrepresentation

can only be called free/no cost if there are no maintenance activity fees

cannot refer to interest as a profit

must state rate of return as Annual Percentage Yield first before using APY

must state if rate changes
minimum balances
opening $
fees may change, reduce earnings
early withdrawal penalties
interest paid out at closure
bonuses if over $0
APY
time require
minimum balance
when bonus is paid
overdrafts
fees for each overdraft
transaction fees
repayment period
then bank will not pay OD
177
Q

Growth Strategies

A

Market Penetration - selling current products to current market

market expansion - selling current products to new market

product expansion - developing and selling new product to current market

Product/market expansion - developing and selling new products to new markets

178
Q

marketing budget expenditures

for 5 core activities

A 
advertising and content marketing
sales promotions
marketing research
training in sales and customer service
public relations
179
Q

intermediary

A

distribution channel that increases the availability of convenience services, increases it use or the revenues from its use, helps maintain existing users, increase use among existing users, or attract new users

180
Q

technology

A

offers banks yet another opportunity to segment their markets, this time based on people preferences to bank online rather than in a branch

181
Q

deposit share

A

when a bank has below average balance compared to the market, it has increased its marginal cost per account

above average - lowered its marginal cost per account. This occurs because bank is spreading fixed costs across fewer accounts which decreases cost per account and increases revenue per account

182
Q

promotion strategy

A

focuses on communicating the availability of products and services to target markets

183
Q

ways a bank makes money

A

interest income
non-interest income
investments and securities

184
Q

typical divisions of a community bank

A

retail
business
trust services

185
Q

NCUA

A

Federally chartered and federally insured credit unions

186
Q

OCC

A

National banks and Federally chartered S&L associates

187
Q

Federal Reserve System

A

Bank holding companies

state banks that are Fed members

188
Q

FDIC

A

state chartered commercial bank that are not Fed members

state chartered savings associations

189
Q

Uniform Bank Performance Report

A

UBPR

public information published from call reports

pay attention to
interest income
non interest income
efficiency ratios

190
Q

strategic goals for departments and business lines

A

product and service pricing

target audience for products and services - use CRM & MCIF to support sales

what are your KPIs

internal and external audiences

segmentation and measurement

191
Q

metrics to determine brand impact

A 
top of mind awareness
balance sheet and income statement
promotional ROI
digital and social
attribution dashboard
192
Q

measure digital success with following metrics

A 
unique page visits
page view
time on page
social shares
comments and interactions
bounce rates
inbound links
193
Q

effectiveness - roi

A

deals with the message, the media used to deliver the message and the results generated

requires setting aside “control groups” for measuring the relative impact of a single variable

194
Q

efficiency - roi

A

deals with the ability of the marketing program to get the best results for the marketing money invested

is the calculation of leverage - total return generated versus the total investment

goal is to create highest leverage

195
Q

market focus

A

when the organization’s focus is directed to a geographic area or a specific group or retail or business customers

196
Q

ways to address CRA requirements

A 
lending
corporate giving and sponsorships
educational programs
community development
volunteer opportunities
197
Q

regulations

A

a government order having the force of law

198
Q

bottom up planning - marketing planning strategy

A

allows the staff to submit concepts and ideas for objectives and goals, which encourages a closer to the market approach accountability and buy in from the staff

199
Q

top down planning - marketing planning strategies

A

involves senior management setting the directions, vision, and mission objectives and goals for organizations and asking staff to implement

200
Q

core product (benefit)

A

is the essential benefit that the customer is buying

ie. the ability to pay with products or services with a debit card or check or electronically

201
Q

market share of assets

A

you can access commercial bank deposits and asset info at FDIC.gov

to determine your share add all total assets for banks in your market and divide by your total assets. this determines the market share of assets

202
Q

market trends

A

what is the marketing professional identifying when tracking the share of wallet, growth and product lines of other banks

203
Q

marketing management

A

Marketing management is the analysis, planning, implementing and control of the program designed to create, build, and maintain mutually beneficial exchanges and relationships with target markets - Phillip Kotler

orchestration of strategies, tactics, implementation and delivery

204
Q

customer profile

A 
should include demographic information about:
age distribution
occupation
education level
income
ethnic composition

may include deposit and lending needs and over all financial goals

205
Q

millenials

A

are in the life stage that influence spending, families, housing, and other significant contributions to economic growth

206
Q

quantitive research

A

a research method in which data are collected by presenting a sizable sample of consumers with carefully prepared questions, either verbally or in writing, the result is statistical data about consumer attitudes and buying behavior

#of follower
shares
likes
reach
bounce rate
clicks
engagement
207
Q

5 principal segmentation alternatives

A 
geographic
demographic
psychographic
volume
benefit
208
Q

The Bank’s CEO has asked the marketing department to develop an advertising campaign for a spring HELOC. What is the first step?

A

Define business goals

209
Q

2 reasons why product is key element in marketing mix

A

Product is firm’s reason for being (to satisfy need of a customer)

All other elements of marketing mix revolve around product

210
Q

Recency

A

How recently the targeted customer or prospect has received a communication from the bank

211
Q

Functional organization

A

Has a specialist who supervise various functions such as advertising, sales promotion, and research are coordinated by the marketing manager

212
Q

Product management organization

A

Similar to function management organizations, except that the bank’s marketing department includes another manager or group of managers with product responsibility

213
Q

Marketing research

A

Is the acquisition and use of information that can be beneficial to the marketing management process. It is the transformation of information, turning raw data into compelling knowledge about the bank’s customers, market, or competition.

214
Q

All banks regardless of their size , should have readily available and up to date information related to:

A

Bank’s geographic market
It’s customers
Potential customers
It’s competition
It’s position relative to the competition
The awareness and perception of the bank’s brand

215
Q

Terminology of marketing strategy

A
216
Q

5 good reasons for making the effort to establish objectives and goals

A
  1. Objective and goals serve as a guide for planning strategies and tactics.
  2. Objective and goals for the basis for the marketing budget process.
  3. Goals for the basis for evaluating performance.
  4. Without goals the bank will not know whether its strategies and tactics are working.
  5. Objective can help build team spirit.
217
Q

Brand awareness

4 categories that should constitute the analysis of the banks competitive environment

A

Operating statistics
Market share
Comparison of marketing strategies
Comparison of products

218
Q

First year revenue

A

Revenue from a promotion prior to eliminating marketing costs

219
Q

Net revenue

A

Revenue from a promotion after eliminating costs

220
Q

WAR

A

Weighted average rate

Calculation performed on a portfolio of like deposits and loans to determine the average rate of the balances

221
Q

Spread

A

For deposits: yield on loan portfolio minus WAR of the promoted deposit products(s)

For loans: WAR of sold loan products minus cost of funds

WAR simply means the average interest rates you are receiving on all loans or specific loan portfolios (excludes leases, investments)

222
Q

Psychographic segmentation

A

Involves classifying the market in behavioral terms according to lifecycle, lifestyle, or personality profile.

Ie. Young professionals on the fast track is a a prime market segment for debit and credit card sales

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