2 AIMS: Retail banking ƒ To learn about: developments in retail banking, banking products and services; key vocabulary of retail banking ƒ To learn how to: express likelihood and probability ƒ To practise: talking about the future of retail banking Lead in o What services would you expect a retail or commercial bank to offer? o What is the difference between retail banking and investment banking? o How commercial banks make money? Reading 1: Commercial and investment banking Liar's Pokeris Michael Lewis's very funny book about working as an investment banker in New York and London In this extract, he explains why he didn't want to become a commercial or retail banker Read the text and explain in your own words what Lewis is saying about: a commercial bankers b investment bankers in 1934, American lawmakers had stripped investment banking out from commercial banking Investment bankers now underwrote securities, such as stocks and bonds Commercial bankers, like Citibank, took deposits and made loans After Glass-Steagall most people became investment bankers Now I didn't actually know any commercial bankers, but a commercial banker was reputed to be just an ordinary American businessman with ordinary American ambitions He lent a few hundred million dollars each day to South American countries But really, he meant no harm He was only doing what he was told to by someone higher up in an endless chain of command He had a wife, a station wagon, children, and a dog that brought him his slippers when he returned home from work at six An investment banker was a breed apart, a member of a master race of deal makers He Unit 2: Retail banking 11 possessed vast, almost unimaginable, talent and ambition If he had a dog it snarled He had two little red sports cars yet wanted four To get them, he was, for a man in a suit, surprisingly willing to cause trouble Find words or phrases in the text that mean the following: a to separate b generally considered to be c didn't want to cause trouble for other people d a big hierarchy of directors and managers e special; different from other people f extremely big 'He lent a few hundred million dollars each day to South American countries.' This is an exaggeration What other exaggerations or jokes can you find in the text ? Discussion Which area would you prefer to work in - commercial banking or investment banking? Why? Vocabulary You are going to read a passage of Peter Sinclair, talking about retail banking Before you read, check your understanding of the words and phrases in the box by matching them with their definitions [1-7] assets income national income currency lucrative liabilities trend a general development or change in a situation or in people's behaviour all the money received by a person during a particular period anything of value owned by a business; for a bank, the loans it has made money that a company will have to pay to someone else one day; for a bank, its deposits profitable (describes an activity that makes a profit) the money earned by a country's people in a particular period the money used in a particular country Unit 2: Retail banking 12 Reading 2: Retail banking Peter Sinclair presents about retail banking According to what he says, is retail banking in decline? Well, I'm not sure that retail banking is declining I think in many countries the size of bank deposits, that's the liabilities that the retail banks have, has been growing faster than national income - it's been rising People are increasingly moving away from currency towards things like bank deposits, that's a slow gradual trend and it's a trend evident in most places, especially the more developing poorer countries, emerging economies and so on So I think retail banking has always been regarded as important, but perhaps a little boring for some people So the real action seems to be more in the big-scale operations with large companies, in huge deals and other kinds of activity which are thought to be more sophisticated and perhaps more rewarding than retail banking More sophisticated yes, more specialized yes, but not more lucrative, and often more dangerous Retail banking I think is not in decline; although people have been predicting that it might be at some point, there's no evidence that it is Read again and look at the following statements Are they true or false, according to Peter Sinclair? In the past, people used to keep more money in cash Because of retail banks, national income is increasing in developing countries Some people think that investment banking is more exciting than retail banking Investment banking is more profitable than retail banking There is more risk involved in investment banking than retail banking Discussion • How has commercial or retail banking changed since the 1980s? • How you think it will develop in the next few years? Unit 2: Retail banking 13 Vocabulary Read the web page below advertising online banking, and complete the sentences Why bank online ? Because you have access to your account 24 hours a day, days a week With internet banking you can: ƒ Check your balance whenever you want ƒ Pay bills without writing cheques or queuing at the bank ƒ Transfer money between your current account and your savings account ƒ Print a statement at any time ƒ Set up, change and delete your standing orders ƒ View and cancel direct debits ƒ Apply for a loan ƒ Apply for a new or increased overdraft ƒ Order foreign currency or traveler's cheques A ……………………is an instruction to a bank to pay varying sums of money to another account on particular dates A ……………… ……………… pays interest but usually has limits as to how much money can be withdrawn during a certain period of time A ………………………lists the recent debits and credits in a bank account An ………………………is an arrangement allowing someone to borrow money by withdrawing more than they have deposited in their account, up to a certain limit A ……………… ……………….pays no or little interest, but usually allows the holder to withdraw cash or pay cheques without any restrictions A ……………………is an amount of money borrowed from a bank for a fixed period A …………………….is the amount of money in a bank account at a particular time A ……………… …………………is an instruction to a bank to pay regular, fixed sums of money to another account Unit 2: Retail banking 14 Use a word or phrase from each box to make common word combinations You can use some words more than once apply for the balance cancel a cheque check an overdraft set up a direct debit transfer a loan write money a standing order Reading 3: The future of bank branches Read the article about retail banking from the Financial Times What belief does the research show to be untrue? Banks to rely on branches to drive growth By Jane Croft Banks will rely on branches to drive future growth) rather than the internet, according to new research A study of 2,709 customers by Deloitte & Touche, the professional services firm, showed that the bank branch is the preferred channel for 52 per cent of customers interviewed Only 16 per cent preferred to bank using the telephone and per cent used the internet The study also showed that the bank branch is preferred by 45 per cent of customers in the affluent AB social group - contradicting the notion that sophisticated customers avoid branches Nick Sandall, retail financial services partner at Deloitte & Touche, said he believed that the main banks in the UK were planning to reverse a decade of under-investment in branches by putting the network at the heart of their strategy 'Although some banks, such as Abbey National, are ahead of the game in their efforts to revolutionise the way in which they use branches to reach the consumer, we expect all banks to invest substantially in reshaping their branch networks and the activities within,' he said Deloitte & Touche believed that the successful retail bank of the future needed to give careful consideration to areas such as branch design, staffing and location Abbey National, which has introduced Costa coffee shops into some of its branches, reports that banking product sales have increased in these locations Unit 2: Retail banking 15 Which of the highlighted words and phrases in the article could be replaced with the following? decisions on types and numbers of employees in advance of competitors make business increase in the years to come redesigning spend a lot of money on ten years of insufficient spending wealthy Read the article again and answer the following questions What have the banks not done during the past ten years? ……………………………………………………………………………………… What are banks expected to in the future? ……………………………………………………………………………………… What has helped one bank to increase product sales in some branches? ……………………………………………………………………………………… Label the pie chart below Discussion ƒ Think about a bank's different delivery channels, or the different ways of banking What are the relative advantages and disadvantages of these for the customer? ƒ Which types of customers are likely to prefer which delivery channels? ƒ What are the relative benefits and disadvantages of the different channels for the bank? Unit 2: Retail banking 16 Choose the correct answer: …………….are people who put money into a business in the hope of making a profit A Spenders B Borrowers C Lenders D Investors The money that you borrow from a banking institution is called a ……… A deposit B loan C guarantee D commission Which of the following banks not ? A print money B make loans C take deposits D invest money When you give money to a bank, who are you? A a borrower B a lender C a depositor D a withdrawer Each business hopes to make a ……… to satisfy the shareholders A share B export C profit D money What are the two main types of bank accounts? A savings and current B savings and premier C savings and cheque D current and credit Investors hope to receive ……….regularly for their invested money A profit B pension C money D dividends The bank is your ………….when it lends you money A owner B creditor C debtor D depositor These …………must be completed before the close of business today A transacts B transacting C transacted D transactions 10 The total amount of sales in a year is called the ……… A expenditure B turnover C profit D dividends Language focus Likelihood and probability 1.In the Financial Times article, there are some predictions about retail banking trends in the future Look at the following sentences, which use phrases to show likelihood and probability Put the sentences [a-l] on the scale [1-5], and underline the word or phrase that states the probability One sentence has been done as an example certain (100%) probable (>70%) Unit 2: Retail banking possible (≈50%) improbable (