Introduction to Retail Bank MarketSim Mike Allen

2 Objectives Overall objectives of schoolObjectives of your first yearYour scenarioNavigation 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 thinkCreates ability to respond to new issuesFull 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 LecturesIntersession 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: Roles Chief Retail Officer Chief Financial Officer Marketing Officer Product Officer – Deposits Product Officer – All Other Delivery Officer

16 How we’ll keep score Your Scenario 16

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 Scenario 17

Your Scenario 18

19 Navigating MarketSim Tour of the Simulation/Model

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 IndustrialWorking ClassStart UpLight IndustrialNew SuburbanTrade-UpOld MoneyBedroom 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 IndustrialWorking ClassStart UpLight IndustrialNew SuburbanTrade-UpOld MoneyBedroom 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 IndustrialWorking ClassStart UpLight IndustryNew SuburbanTrade-UpOld MoneyBedroom 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 IndustrialWorking ClassStart UpLight IndustryNew SuburbanTrade-UpOld MoneyBedroom 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

30 With all of the this you will need a process MarketSim Process

Time Management Focus via Visual Aids Communication 31 Your Process

32 AnalyzePlanForecastExecuteReview Retail Bank MarketSim Process Flow

Your Process 33 AnalyzePlanForecastExecuteReview Worksheets Reports Decision Inputs Retail Bank MarketSim Process Flow

34 What’s Next

Your Process 35 AnalyzePlanForecastExecuteReview Retail Bank MarketSim Process Flow

36 What’s Next  Developing tools to analyze your MarketSim Bank  Deal with any lingering issues with your Surfaces 36

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: We value your feedback! Evaluations