Big Bank Growth Strategy?

[Lightproton]

__________________UPDATE FROM 08 Mar 25__________________
I added a video on Building an Insurance Company in the Banking and Finance DLC: https://youtu.be/1N_zhymsrQg?feature=shared
As always, feedback and questions are very welcome!

Script file:

Building_an_Insurance_Company.zip

Script file insurance

(1.58 KiB) Downloaded 22 times

Curious to read your feedback! Thank you!
____________________________________

Dear Capitalism Lab community

Hope you are all fine and safe

I just completed my video on Banking and Finance DLC https://www.youtube.com/watch?v=QtMNfvqynys and want to share my script (because it was requested in a comment and I don't have a website yet). Feedback and questions are very welcome!

Script file:

Building a Banking and Investment Company.zip

Script file bank

(1.33 KiB) Downloaded 299 times

How do you manage the bank capital requirement especially in the beginning in the bank growth phase?
The higher the growth, the more equity capital is needed. Obviously, the initial capital is limited and the bank income is not high enough in the beginning to provide the equity capital for such high growth. From what I know so far, there are two options: a) Earning more equity capital from another industry or b) limit growth. Limiting corporate deposits is probably the best approach to limit growth as corporations on average have higher interest rates with long-term deposits (AI does that). Another options is a hard stop which can be set in the bank HQ (Overview - Stop Bank Deposits and Loans in the bottom right corner of the overlay).

What is your approach to maximize the Net Interest Margin?
In Economic State of Expension this seems to work well: Accept loans from all credit ratings (higher loan interest rate but also higher rate of defaults) and limit Corporate Deposits (lower deposit interest expense). Is it really sustainable in other Economic States and is it not better to grow faster and follow the big bank strategy in longterm?

[cantdownloadit]

Nice

If you factor in the loan interest i think you spent more buying logic logic than just setting up a firm yourself though

[Jalwearnshaw22]

Great video mate. Keep it up I would love to see a video on the service dlc once it's made

[Lightproton]

Nice

If you factor in the loan interest i think you spent more buying logic logic than just setting up a firm yourself though

Thanks for the feedback and I partially agree to that at that stage of the scenario. The idea of buying other companies is, on the one hand, to get access to their expertise, technology and/or assets. The target company brought with it the high expertise in Furniture from the CEO and a few years of R&D into one product. Probably, this could be also accomplished in short time with a new subsidiary. Still, on the other hand, the competition could be more intensive as the other company still remains on its own. So, buying an already existing company also reduces the number of competitors by one. Consolidation of a market and avoiding competition, which reduces margins, is another intention of buying other companies. At a later stage of the scenario, targeting the 2nd or 3rd company, the maturity of the target company might be higher (technology, assets with high customer traffic and/or high level of experience) and it even could make more sense to buy an existing company than rather launching a subsidiary on our own in this industry from scratch. What do you think?

[David]

Hi Lightproton, thanks for this new video on running a bank. It looks great!

I've shared it on CapLab social media (https://www.capitalismlab.com/community/) and have been seeing positive responses.

I also added a link to your video from the official CapLab website's Banking and Finance DLC:
https://www.capitalismlab.com/banking-dlc/ (you can see the link at the last section of this web page)

[13thscholar]

Great video Lightproton!!

I learnt some things (I hadn't considered doubling up the marketing). I would only say that as much as I agree you wanting to buy up a company for the expertise, I tend to let it fall initially.
It is an interesting idea to buy just enough to run the company, I usually purchase 2 or 3 retail stocks on the falling knife theory with my own money (sell a few company shares) and sell them off once they reach that 30-90 range to buy up more of my own company again. But if you are to do it with the company money, it could become expensive, as opposed to potentially hiring a CTO and researching yourself if everyone is on 30 tech level to start.

If I could for your videos, have you considered selecting my firms and then product or firm type to flick between them so people can see more of the firms rather than find them in the maps?

Anyway, you are braver than me to do such an extensive gameplay vid, keep them coming.

[Lightproton]

Thank you for the great feedback! I like your strategy and will try it out! I agree to the point that taking over a company just to get access to the expertise and technology is very expensive. Not sure if it makes a difference with the Digital Age DLC, when number of talents in R&D are limited and it is harder to catch up with R&D. Probably not really. Still, I see the longterm advantage (very longterm ) of reducing competition in this product class by one company and therefore not losing profit margin due to lower prices.

I will consider using the filters on the mini map in the next stream. Thanks for the suggestion! Very helpful! Makes sense!