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CBI > Unit 1 - Banks & Banking > Flashcards

Unit 1 - Banks & Banking Flashcards

1
Q

What is the oldest bank in the world and founded when?

A

Banca Monte dei Paschi di Siena & in 1472 ( still operating til now)

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2
Q

What’s the oldest bank in the UK?

A

C. Hoare & Co since 1672 (privately old & still here)

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3
Q

A mutual financial institution which specialises in lending to customers wishing to buy a house is known as:

A

Building society

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4
Q

What is financial intermediation?

A

When £ deposited in a bank( by savers) is lent by bank to borrowers. So by accepting deposits from savers & using to make loans to borrowers. Banks function as financial intermediaries!

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5
Q

What is disintermediation?

A

When lenders and borrowers deal directly with each other & not using a bank as an intermediary!

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6
Q

If I was a customer needing a mortgage and some life assurance, which type of financial organisation would I need to go to?

A

Investment Bank & On-line bank

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7
Q

What year did Building Societies become demutualised and effectively became like a retail bank?

A

1986

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8
Q

What is a commercial bank?

A

Similar to retail banking but for small & medium sized businesses

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9
Q

What is NOT a feature of a Credit Union?

A

They are owned by shareholders who buy shares in them via the stock market.

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10
Q

Wholesale banking involves borrowing and lending with which types of organisations?

A

Large corporate clients, other financial institutions, public agencies & governments through the interbank market.

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11
Q

In terms of digital innovations, what does RPA stand for?

A

Robotic Process Automation

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12
Q

The main purpose of a building society is to:

A

Raise, primarily from its members, funds for lending to members for the purpose of buying a residential property.

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13
Q

What are Credit Unions?

A

Non-profit co-operative organisations. They are owned by their members who pool their savings and lend to each other.

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14
Q

What are Digital-only banks?

A

Banks who have a full banking license and can therefore compete on equal terms with traditional banks.

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15
Q

According to King (2018) at what banking stage is ‘when and where we need it, starting with the emergence of the Smartphones, and a shift to mobile payments’?

A

Bank 3.0

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16
Q

What year did the first ATM open?

A

1967

17
Q

What is cloud computing?

A

The delivery of computing services, for eg, servers, storage, databases,networking, software, analytics & intelligence.

18
Q

The stakeholder approach to running a bank states that the bank must always:

A

Balance the needs of all stakeholders when taking decisions

19
Q

What are challenger banks & categories of it?

A

They are small and seem to challenge bigger banks through innovation & food service. Finbold (2022) shows there were 291 challenger banks. Groups;
1. Banks with high street presence
2.digital only banks
3. Challenger banks focusing on business services

20
Q

What are 3 core functions of the Bank?

A
  1. Operating payment mechanisms
  2. Accepting Deposits
  3. Making Loans
21
Q

What is the case study of a non-bank providing payment services directly to customers?

A

Worldpay- merchant services & payment processing provider launched in 1997, it’s the UK’s leading service provider

22
Q

What is assets & liabilities from the point of view of a bank?

A

•Assets- are loans that a bank makes to its borrowers - borrowers owe this £ to the bank
• Liabilities- deposits that a bank accepts from its savers- bank owes this £ to the savers

23
Q

What are 3 types of transformation?

A
  1. Size transformation(aggregation)- banks collect small deposits & repackage into larger loans
  2. Maturity Transformation
  3. Risk Transformation
24
Q

What risk comes with lending money?

A

Credit Risk

25
Q

What is reputational risk?

A

The threat to the good name of a company, can be result from actions & conduct

26
Q

What’s the case study on payment provider?

A

Worldpay- merchant services & payment processing provider in 1997 & it’s UKs leading service provider

27
Q

From the 4.0 of King B at what point did banking when you need it mobile banking, fintech & digital only banks?

A

3.0 (2007-2017)

28
Q

What’s the case study on Open APIs(diff apps to communicate & interact with each other) ?

A

Moneyhub- personal finance management tool which collates customer banks accounts, credit cards, investments, saving&borrowing, property & pension

29
Q

What is a technology which allows people to make payments to each other without central clearing point?

A

Blockchain

30
Q

What is correct about cryptocurrencies?

A

Don’t exist in psychical form & not regulated by any central bank. Some countries allow it eg UK, US & Canada to use Bitcoin. But illegal in China, Saudi Arabia etc

31
Q

What is operational risk?

A

The risk of loss resulting from inadequate/failed internal processes, people/external events

32
Q

What is strategic risk?

A

From a banks long term business strategy & strategic objectives, if a company changes its strategy the new one might not be successful

33
Q

What is part of financial risks?

A
  1. Credit Risk 2. Liquidity Risk 3. Concentration Risk 4. Market Risk 5.Strategic Risk 6.Operational Risk
34
Q

What are the legal risks in a bank?

A
  1. Litigation Risk
  2. Regulatory Risk
  3. Compliance Risk
  4. Conduct Risk
35
Q

What are the 2 overarching risks? These not affect banks but to the financial system & economy.

A
  1. Systemic Risk: A failure in 1 part of a system will spread to the whole system.
  2. Climate Risk: Awareness of current and future impacts of climate change
36
Q

What type of risk does the BIS(2023) define as ‘the risk of loss resulting from inadequate/failed internal processes, people etc’?

A

Operational Risk

37
Q

In banking, what is liquidity?

A

Having sufficient cash & other assets that can be converted quickly into cash to meet the immediate withdrawal needs of customer.

38
Q

Macroeconomic examines factors such as:

A

Unemployment, gross domestic product & inflation

CBI (7 decks)

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