Introduction to Retail Bank MarketSim

Mike Allen

2

Objectives

Overall objectives of school

Objectives of your first year

Your scenario

Navigation of the model/simulation/”your new reality”

Schedule, process and what’s next

3

What we will accomplish in the next 11 days & in the next 3 years.

Objectives

4

CBA Executive Banking Objectives

Retail Strategy• Customer acquisition• Branding & marketing• Product & pricing• Delivery optimization

Bank Management Strategy• Economic value & risk• Capital considerations• Analyst influences• 360° executive

management

Financial Strategy• Financial analysis• Key performance

drivers• Earnings power• Risk considerations

5

Experiential Education

• Proves multiple ways for to learn & process information

• Leads to ways to think, not how to think

• Creates ability to respond to new issues

• Full immersion without drowning

6

Experiential Education

Educational Framework

7

MarketSim Objectives

Retail Strategy• Customer acquisition• Branding & marketing• Product & pricing• Delivery optimization

Bank Management Strategy• Economic value & risk• Capital considerations• Analyst influences• 360° executive

management

Financial Strategy• Financial analysis• Key performance

drivers• Earnings power• Risk considerations

8

MarketSim Objectives

Generate insight into the interplay between key retail strategies in product lines and pricing, delivery channels, customer segmentation, marketing and branding.

Evaluate trade-offs in decision-making while solving to a business plan and Balanced Scorecard.

Inspire elevated cross-departmental teamwork and integration with the greater goals of the retail bank.

Link content from the simulation to business objectives.

8

9

MarketSim Objectives

• Retail Banking Simulation• Live Bank Case• Tactical Case

How are we going to get there?

• Main Lecture Room• Community Rooms• Team Rooms

Lectures

Intersession Assignment

10 Your Scenario

11

Your Scenario

You and your management team have just been appointed to run retail for this bank.

Prior management has elected to run it the Old Way.

You are not differentiated at all from your competition.

Your CEO has said “We need to make more money in Retail and I Hope it works out for you!”

11

12

Your Scenario

You are a team of retail professionals.

You will get a lecture on a subject and then your team must decide who, what, how much, and how.

You are in a community with 4 other banks and “monoline” national players.

A computer model will be used to simulate the results of you decisions in the market.

12

Your Scenario

14

Your Scenario

Starting Point sent previously

Each bank starts at the same place

NOT a very well run retail bank!

Reports shows Customers, Delivery, Product, and Financial data

Worksheets provide forecast tools

14

15

Your Scenario: RolesCh

ief R

etai

l Offi

cer

Chief

Financial

Officer

Marketing

Officer

Product Officer – Deposits Product Officer – All Other

Delivery

Officer

16

How we’ll keep score

Your Scenario16

17

A stock analyst will analyze each team in a community. Results are based on balanced scorecard fundamentals.

They will then rank each team against the other 4 and compute a Balanced Scorecard Index (BSI) The analyst uses this to HYPE Stocks.

The analyst then publishes this for all their sales force to see.

Your Scenario17

Your Scenario18

19 Navigating MarketSim

Tour of the Simulation/Model

www.retailbanksim.com

20

Customer Design

Product Price

Product Revenue

Variable Costs

Income

x

=

-

=

Team selects target markets and invests in marketing

Fixed Costs

-

Team selects products and product features

Team determines pricing

Team defines distribution architecture

Navigating MarketSim

21

In case you thought this is easy…

22

Change levers, such as investing in customer marketing, effect appeal along one or more dimensions

Just Starting

Working Poor

First House

Emerging Affluent

Blue Collar

Single Income

Pre-retired

High-income M&S

Money Mogul

Downtown

Industrial

Working Class

Start UpLight In

dustrial

New Suburban

Trade-Up

Old Money

Bedroom Community

Checking Reg

Checking Gold

Savings

Investments

Loans

Target marketing decisions (e.g. to Blue Collar Segment) affect appeal across this band

Navigating MarketSim

23

Just Starting

Working Poor

First House

Emerging Affluent

Blue Collar

Single Income

Pre-retired

High-income M&S

Money Mogul

Downtown

Industrial

Working Class

Start UpLight In

dustrial

New Suburban

Trade-Up

Old Money

Bedroom Community

Checking Reg

Checking Gold

Savings

Investments

Loans

Product Change decisions (e.g. to

Checking Gold) affect product appeal across

this band

Navigating MarketSim

24

Just Starting

Working Poor

First House

Emerging Affluent

Blue Collar

Single Income

Pre-retired

High-income M&S

Money Mogul

Downtown

Industrial

Working Class

Start UpLight In

dustry

New Suburban

Trade-Up

Old Money

Bedroom Community

Checking Reg

Checking Gold

Savings

Investments

Loans

Distribution Change decisions (e.g. to Light Industry area) affect appeal to customers in cells across this band

Navigating MarketSim

25

Just Starting

Working Poor

First House

Emerging Affluent

Blue Collar

Single Income

Pre-retired

High-income M&S

Money Mogul

Downtown

Industrial

Working Class

Start UpLight In

dustry

New Suburban

Trade-Up

Old Money

Bedroom Community

Checking Reg

Checking Gold

Savings

Investments

Loans

Navigating MarketSim

26

Changing Levers Impact

27

Changing Levers Impact

28

For the next 11 days

The Schedule

7:30-9:45 Community Rooms

**7:30 Start Time**

MarketSimPresentations

4:00-5:00

Team Rooms

Tactical CasePresentations

2:00-3:00 JH 101

RegulatoryUpdate

(Hunt)

Development Team ExerciseAnalysis and Presentation

2:30-5:00 JH 101

Live Bank Case: Strategy & Wrap-up

(Allen & Underw ood)

(Hippensteel)

1:00-2:00 JH 101

IntrasessionAssignment

(Gambucci)

10:30-12:00 JH 101

Ethics(Smythe)

10:30-12:00 JH 101

(Smythe)

Ethics1:00-2:30 JH 101

Debrief

8:00-9:00

Community Rooms

Debrief

8:00-9:00

Team Exercise

9:00-10:30 Team Rooms

Decision 5Team Exercise

9:00-10:30 Team Rooms

Decision 6Team Exercise

1:00-2:15 JH 101

CRO/CFOBusiness Plan

Functional

2:15-4:00 Team Rooms

Business Plan Development

Team Exercise

Community Rooms Current Topics3:00-5:00 Team Rooms

Team ExerciseTactical Case Study2:30-4:00 Team Rooms

Performance1:00-2:30 JH 101

Saturday, July 25: No Classes

Presentations

DebriefCommunity Rooms

8:00-9:00

Decision 49:00-10:30 Team Rooms 10:30-12:00 JH 101

Integrated DecisionMaking

(Allen) (Vanderheide)

Analysis II

2:00-4:30 Team Rooms

Decision 1 Team Exercise

1:45-2:30

4:00-5:00

Team Rooms

Business Plan

12:00-1:00

LUNCH

12:00-1:00

LUNCH

12:00-1:00

LUNCH

Comm Rms

Debrief

2:30-5:00 Team Rooms

Decision 2Team Exercise

2:30-5:00 Team Rooms

8:00-9:00 JH 101

Live Bank Case:

Delivery

9:00-10:30 Team Rms

Team Exercise

8:00-9:00 JH 101

Live Bank Case:

Product

9:00-10:30 Team Rms

Team Exercise

10:30-12:00 JH 101

Product Design& Pricing

(Frisbie)

10:30-12:00 JH 101

10:30-12:00 JH 101

Delivery Strategies(Travis)

Leadership II(Callahan)

(Callahan)

Leadership2:30-4:00 JH 101

MarketSimFinancial Reports

(Smythe)

8:00-9:00 JH 101

Live Bank Case:

Customer

9:00-10:30 Team Rms

Team Exercise

4:00-5:00

12:00-1:00

LUNCH

SurfaceOrientation

9:00-10:00 JH 1018:00-9:00 JH 101

8:00-10:00 JH101

Strategic Planning Team Rooms

Team Exercise

3:00-4:00

Comm Rooms

Debrief

1:00-3:00 JH 101

Retail Bank Performance Analysis(Vanderheide)

10:00-12:00: JH 101

Consumer Bankers Association

Executive Banking School: Year 1

and Marketing

(Underw ood)

Sun 7/19

Mon 7/20

Tue 7/21

10:00-12:00 JH 101

Balanced Scorecard(Allen)

10:30-12:00 JH 101

Customer Segmentation

Welcome &Introductions

(Underw ood)

4:00-5:00 Comm Rm

SurfaceWorkshop

1:00-2:30 JH 101

Intro to MarketSim(Allen)

12:00-1:00

LUNCH

Decision 3Team Exercise

1:45-2:30

Comm Rms

Tue 7/28

Wed 7/29

Wed 7/22

Thur 7/23

Fri 7/24

Sun 7/26

Mon 7/27

1:00-1:45

JH 101

ProductFunctional

1:00-1:45

JH 101

DeliveryFunctional

12:00-1:00

LUNCH

12:00-1:00

LUNCH

12:00-1:00

LUNCH

Debrief

8:00-9:00 9:00-10:30 Team Rooms

Team Rooms Initial PlanTeam Exercise Presentation

1:00-2:00 JH 101

MarketingFunctional

12:00-1:00

LUNCH

8:00 8:30 9:00 9:30 10:30 11:3010:00 11:00 12:00 12:30 2:30 3:30 4:301:00 2:00 3:00 4:00 5:00

8:00 8:30 9:00 9:30 10:30 11:3010:00 11:00 12:00 12:30 1:30 2:30 3:30 4:301:00 2:00 3:00 4:00 5:00

30

With all of the this you will need a process

MarketSim Process

Time Management

Focus via

Visual Aids

Communication

31

Your Process

Your Process

32

Analyze

Plan

ForecastExecute

ReviewRetail Bank

MarketSimProcess Flow

Your Process

33

Analyze

Plan

ForecastExecute

Review

Worksheets

Reports

Decision Inputs

Retail Bank

MarketSimProcess Flow

34 What’s Next

Your Process

35

Analyze

Plan

ForecastExecute

ReviewRetail Bank

MarketSimProcess Flow

36

What’s Next

Developing tools to analyze your MarketSim Bank Deal with any lingering issues with your Surfaces

36

2:30-4:00 JH 101

MarketSimFinancial Reports

(Smythe)

4:00-5:00 Comm Rm

SurfaceWorkshop

1:00-2:30 JH 101

Intro to MarketSim(Allen)

1:30 2:30 3:30 4:301:00 2:00 3:00 4:00 5:00

37 Finally…

37

38

It’s okay to be a little nervous

It’s okay to get a little lost

It’s okay to get a little distracted

It’s okay to make mistakes

It’s okay to have fun!

38

39 Sit tight, Dr. Tom is next!

40

Click below to fill out your course evaluation:https://www.surveymonkey.com/r/mktsimintro

We value your feedback!

Evaluations