How do banks raise money?
By selling shares
Advantages of banks
- customers have easy access to different products and services
- size of the bank means it can afford to invest in new products and services
Disadvantages of banks
- customer service may be less efficient that in smaller organisations
What are building societies?
Mutual organisations owned by customers called members.
Advantages of building societies
- all customers are members how have a say in how the society is run
- building societies have no shareholders and don’t need to pay dividends
- all the profits made are used to benefit the members
- customer service tends to score higher than that of banks
Disadvantages of building societies
- unlikely to spend the same money as banks on research and development
- need to rely on partners to offer certain services
Why are building societies smaller than banks?
- they tend to operate only in the UK and have a local focus
- legal restrictions are placed on their business activities
- there are restrictions on the amount of unsecured loans that societies can make
Define demutualisation
Where the mutual status of a building society changes to a bank.
What are credit unions?
Mutual organisations run and owned by members that share a common bond.
What are the potential common bonds that members in a credit union might share?
- living and working in a certain area
- working for a specific employer
- belonging to a specific organisation
What products do credit unions offer?
- loans
- savings
- insurance
- prepaid payment cards
- life assurance
- the Credit Union Current account
What products do building societies offer?
- savings accounts
- mortgages
- current accounts
- credit cards
- insurance
What are the advantages of credit unions?
- lower operation costs
- profits made benefit members
- provide local and community focused service
- inspire customer loyalty through the common bond
Disadvantages of credit unions
- may offer a limited product range depending on size
What is NS&I?
An executive agency of the Chancellor of the Exchequer
What products does NS&I offer?
- cash ISAs
- savings account
- investment accounts
- income bonds
- premium bonds
How do premium bonds work?
Every month 2 premium bonds are selected at random to win £1 million, and there are over a million cash prizes.
What products do the post office offer?
- savings accounts
- mortgages
- credit cards
- loans
- cash ISAs
- home and care insurance policies
- travel insurance
- life cover
- pet insurance
What are the advantages of branches?
- customers can have face to face conversations with staff
- branches can advertise all products
- branch staff offer personal services
Disadvantages of branches
Branches are expensive to run
Advantages of online banking
- 24/7 access
- banking transactions are made immediately
- customers can research products and make calculations using online tools
easy to spoil for products online - low cost compared to branches
Disadvantages of online banking
- security issues
- lack of personal contact makes it hard to ask specific questions
Advantages of telephone communication
- customers can contact banks 24/7
- call centres have longer opening hours than branches
- call centres are less expensive than branches to operate
- customers can receive specialist advice that may not be available from a branch
- Customers can get tailored advice
Disadvantages of telephone communication
- potential fraud
- quality of customer service isn’t always good
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Topic 1 - Purposes of money8
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Topic 2 - The personal life cycle24
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Topic 3 - Payment methods22
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Topic 4 - Everyday banking20
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Topic 5 - Savings products29
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Topic 6 - borrowing products19
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Topic 7 - Providers28
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Topic 8 - Consumer protection15
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Topic 9 - Budgets and forecasts11
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Topic 10 - Dealing With Unexpected Events11
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Topic 11 - Dealing With Debt18
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Topic 12 - Earnings7
