Discover the basics of community banking
LESSON 1 : What is a bank?“Banking” can be a difficult thing to explain. This lesson defines the role of the bank in your local community and lays the groundwork for beginning to understand each banking role in the larger of picture of the community and its economic development. Lesson 1 starts out with the traditional definitions we hear about banking, a discussion of the importance of banking, as well as general overview of a typical bank’s structure. In addition, this lesson briefly discusses the history of banking up through the start of the 21st century. This begins to lay the groundwork, through a discussion of some of the pertinent regulations, for a basic grasp of the acronyms in banking as well as the regulatory environment in which we must exist.
LESSON 2: Banking Today“Banking Today” This lesson picks up where Lesson 1 ended (at the turn of the 21st century) and opens with a discussion of the recent legislation that has shaped our industry over the last 2 decades. As a result, the student begins to understand the difficult line banks must walk each and every day. One, banks are an extremely regulated enterprise, but, two, the customers still have financial needs that must be met within the community. The rules may be difficult to understand, but they are the rules and we still must serve our customers. Finally, we begin our discussion of the Federal Reserve System and how they interact with banks. By understanding the Fed as playing a vital role in the daily life of a bank, students begin to see their bank as part of a larger industry serving the needs of the community.
LESSON 3: MoneyWhile it may seem simplistic, understanding what money is, how it is regulated, and how it operates is crucial to understanding fundamental banking principles. This lesson introduces students to the money supply, the regulation of the money supply, and macroeconomic factors that impact the money supply. Then the lesson translates this information into a discussion of the impact these topics have on the local community bank. The economic news we see on TV or read about on our phones has real life implications for how the bank operates as well as what products the bank can provide to the community.
LESSON 4: Deposits
This lesson is an introduction to the deposit side of the bank. By no means exhaustive, this lays the groundwork for students’ understanding of bank deposits from the bank’s point of view. The concept of “net savers” has been introduced, but this lesson goes deeper into knowing how customers interact with their money…and does so with the local community in mind as well as adherence to the individual bank’s account opening procedures.
With the purchase of this lesson, there is a free addendum (Lesson 4.5) which serves as a brief introduction to how money moves through the system between accounts when we write a check or swipe our cards.
LESSON 5: Lending
Regardless of what area of the bank one is in, understanding what loans are and how they work is crucial to understanding banking. Loans make up the largest portion of any bank’s revenue so it is important to have a working knowledge of the product and how it benefits the local community. This lesson covers the various types of loans, parts of a loan agreement, how banks make money from lending, and a brief discussion on credit decisioning.
In addition, there is a discussion on loan specific regulations as, in today’s environment, one cannot understand loans without understanding the regulations that surround them. This is done in a manner that complements your bank’s policies and encourages the student to inquire further with your compliance team.
LESSON 6: Financial Planning
While this lesson does cover the more traditional aspects of “financial planning” (insurance, investments, trust, etc.) it goes beyond that. This lesson begins the process for understanding “how” and “why” customers need a bank’s products. While every bank is different in its sales process or product offerings, all bank employees need to understand the consumer life cycle and where their bank fits into that process for their customers.
While special care is given to compliance issues concerning licensing, every banker needs to know what products their bank offers, what customers need those products, how the customers will use those products, and when they will use them.
LESSON 7: Building and Protecting Relationships
Every bank has, at some level, a concept of “relationship banking”. This lesson unpacks that phrase by continuing our conversation on the customer life cycle, understanding market and wallet share, and the importance of trust in a banking relationship. This is by no means an exhaustive security presentation, but it does introduce the importance of the stringent security policies each bank has and why it is so important to the success of the bank that these policies are followed.
This lesson is designed to demystify the security part of the bank insomuch as it places it within a context of protecting our community and protecting the bank. Everyone recognizes that relationships are built on trust…and banking is no different.
LESSON 8: Keeping Score
Banking has a very unusual vocabulary. A bank’s financial statements look nothing like the basic ones we learned in school and this produces a completely foreign language to many bankers. This lesson presents a basic grasp of the bank’s financial statements and some of the most common ratios discussed around the bank. In addition, this lesson introduces some of the basic risks through which banks must negotiate in order to survive.
Finally, this lesson summarizes the key concepts of this entire series on fundamental banking principles in order that students have a firm grasp of the key topics covered throughout this series.
Byron Earnheart is the Programming Director at the Barret School of Banking. He has nearly 20 years in the banking/financial services industry. He graduated with a bachelor’s degree in Finance from the University of Tennessee, MBA from Christian Brothers, and summa cum laude graduate from Barret School of Banking.