3.1 Types Of Banking Customers And Their Needs

Question 1

Customers can be sub divided into the following groups:

Answer 1

• personal customers
• small and medium sized enterprises (SMEs)
• corporates (inc plc)
  -charities
• clubs, associations and societies
• trustees

Question 2

1. Personal customers (PC)

Answer 2

Private individuals who use bank services for their own use.
Accounts can only be held in only their name or jointly with someone else.

Use current account to receive their income and make payments.

Can have a credit card to help them make purchases or DC.

‘High net worth individual’ - wealthy, high income and receive special services

Question 3

2. Small and medium sized enterprises (SMEs)

Answer 3

Banks offer business banking facilities to businesses with an annual turnover of up to £6.5m

Sole trader = self employed, separate business accounts as it’s easier to deal with tax affairs and to keep business and personal finances separate.

Partnership = two or more people make an arrangement to operate a firm and share any profits.

Question 4

SMEs

Answer 4

Are private limited companies

= is a separate legal entity from its shareholders.

Example: if a customer takes legal action against the business, the legal action is against the company itself and not its shareholders.

PLC - can’t offer their shares to the general public
Run by directors who manage the business and have access to the bank account.

Question 5

3. Corporates

Answer 5

Are large limited companies and often public limited companies (PLCs)

Can offer their shares for sale to the public and can become large as they have access to money from external shareholders.

Financial needs are complex and managed by bank corporate division.

PLCS may need access to short-term finance and need new loans to invest.

Question 6

4. Charities

Answer 6

Organisations that are set up to collect money for causes which are charitable under the law.
(E.g. relieving poverty or sponsoring the arts)

Responsible for managing the money donated to them
Do not aim to make profit

Question 7

5. Community groups

Answer 7

Group of people who create a formal structure around a common interest example a sport.

Can be a registered charity
Refer to Society, club, Association

Voluntary, non profit organisation

Question 8

6. Trustees

Answer 8

Is a person or firm that holds and manages property or assets (under a trust) for the benefit of a third party.

Each trust needs a current account but procedures and operations of the account depends on the legal status of the trust.