Banking Terms for Bank Exams
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1. Bank Marketing: Bank Marketing means selling of bank’s products and services
2. Balance sheet: The balance sheet of an organization gives information about its assets and liabilities or sources and usage of funds at a particular point of time. A profit & loss account is a statement of expenditure and receipts of a company over a period of time. A trial balance is a statement of all credits & debits and is the first step to making a P & L and BS.
3. Bench Marketing: A comparison of the business processes with competitors and improvement of prevailing ones is called bench marketing.
4. BEP: BEP stands for break-even point. BEP is that quantity of production or value of services where the firm makes neither profit nor loss
5. BPO: In the context of globalization, BPO means Business Process Outsourcing. After globalization started in 1991 in India, a lot of foreign banks started outsourcing their back-office operations to India because they find it cost-effective. Back-office operations in banking involve analysis of balance sheets/P & L account for evaluating investment opportunities, credit profiles, loan applications etc., for customers of the foreign bank, normally located abroad.
6. Branding: The essence of a product, its quality and competitiveness displayed in the form of letters, symbols and colours is known as branding.
7. Buyer behaviour: All acts of a consumer in identifying, buying and using a product or service is buyer behaviour. It includes his decision-making before as well as after the use of the product/service.
8. Cold call: A cold call is visiting a prospective customer without a prior appointment
9. Consumer Information sources: Consumer Information sources are personal talks with them, their friends, third party references, mobile/credit card usage behavior, buying behavior of consumer durable, leisure travel habits, job profile and family profile .
10. Customer Database: Customer Database means information about a customer. It can encompass a wide gamut of information about the customer ranging from his telephone number, his date of birth, to his buying behavior and preferences, credit card usage and payment. Customer Database is used by Companies including Banks to increase revenue from existing customers as well from prospective customers.
11. Customer Loyalty: Customer Loyalty means a customer banking exclusively with 1 bank. Banks ensure customer loyalty.
12. Customization: Customisation means modifying product/service features to suit the needs of an individual customer. In the context of banking, it can take the form of pick up/drop of cash at customer’s residence, adjusting re-payment schedules for loans depending on an individual’s repayment capability. Normally customisation will be done for HNI or for those who can be potential high revenue generators for a Bank. The major revenue stream for a Bank is the interest it collects on loans, the fee it gets for portfolio management, commissions on for selling insurance / mutual fund products, managing share issues (IPO – Initial Public Offering), underwriting under subscription in IPO. Underwriting is a procedure in which if a Company goes for an IPO of Rs. 1000 crores & the public invests only 500 cores, the Bank which is the underwriter to the issue will make up the balance of Rs. 500 crores. And non-fund based activities like providing bank guarantees, opening letters of credit etc.
13. 3Cs: During pricing, the factors like customers’ demand, cost-function and the competitors’ prices are collectively known as 3Cs.
14. Contribution: In the context of marketing, “contribution” means selling price minus the variable cost.
15. Cross selling: An exposure to various other unutilised services of the bank to a customer is called cross selling.