Some additional ideas for the Banking DLC
Posted: Tue Jun 05, 2018 10:24 am
Hi All,
Firstly, might I say I think Capitalism Lab is the best gamer ever! And really enjoying the new Digital Age DLC. Have been reading the posts about the Banking DLC with interest as this would be a great addition, and working in this industry have a few ideas which don't seem to have been discussed at all or in much detail. Please let me know your thoughts!
Banking / Checking Accounts
All major retail banks provide bank / checking accounts, I’ve not read anything about this in the threads so far. But please correct me if I’ve missed this.
I’d envisage this as being similar in nature to the mechanics of a subscription internet company in the Digital Age DLC – we would need an underpinning technology (e.g. researching a “Core Banking Platform”) and a monthly investment in “features” to provide an overall service quality. We can then set the monthly account fee per branch or per city, to generate a source of non-interest income for the bank.
This could be simplified and not assume any debit or credit balances, but personally I’d like to see these as another channel to both raise low-cost but low-value deposits that customers maintain in their account, and providing overdrafts to customers for a high-risk and high-return asset.
Also, as in real life banks often use these accounts to cross-sell their deposit and loan accounts. It would be good to see this dynamic also, so it becomes easier to generate market share of loans and deposits if you have a high market share of checking accounts. It would also make those deposits and loans more sticky with price, as customers prefer to have everything in one place.
I'd also love to see the ability to offer credit cards too!
Online Banking
As per in real life, it would be great if there is a shift later in the game away from traditional branch based banking and towards online and mobile banking.
This could be similar to the introduction of the e-commerce internet company in Digital Age DLC, so we would need to research another new technology (e.g. “Internet Banking Platform”) and either build a new internet company or add this as a unit within the existing Bank HQ. We could then take deposits, offer loans, and provide bank / checking accounts through the internet bank. As the reach of the internet bank grows, the footfall and balances held through the physical branches declines.
Branding / Advertising
This is a question, as I’m assuming this is being built in to the banking mechanics. How will this work? Will we advertise the retail bank in each branch, through the HQ, or both?
Payments Provider
As well as taking deposits and making loans, financial services companies provide the technology infrastructure for card and online payments, and make a healthy profit in doing so. Think VISA, MasterCard, American Express, etc. It would be great to have the option to go down this route as a payments provider.
Again, as a simplified model my thoughts are this could be offered with a required technology (e.g. “Payments Engine”) and a monthly investment in features to determine overall quality. The higher the quality, the higher the reach and market share of payments in each city (this could be the collective sum of all retail revenues in the city), and income generated from interchange fees. On the flip side, if you are playing as a retailer this results in an additional expense to manage through your pricing.
Corporate Bond Market
More a question than an idea. I am aware that this is already going to be part of the DLC, but is there going to be a secondary market for buying and selling these bonds?
Obviously in real life this is extremely common and companies can even buy back and cancel their bonds. The price of the bonds will rise and fall depending on the relative yield and the associated risk of the company (I assume the credit rating of the bond will change after it’s being issued, so if a company starts tanking the rating will drop and bond value plummets).
Investment Banking
This is a very complex business, but it would be awesome to be able to develop an investment bank. Here’s two potential ideas for how these could operate
Trading Desks – You set up a “trading desk” unit in an Investment Bank HQ, and through the talent system engine in the game can hire or headhunt a trader. The higher the skill level, the higher the salary (and bonus!) but also greater ability to make you money. You could then allocate a certain amount of the bank’s capital to each trading desk individually, set the level of risk you’re prepared to take (low, medium, high?) and they go off and do their thing.
You could also link the “trading desk” to a “research desk” (hiring a research analyst) to greater increase the probability of making money.
I’m not sure how the mechanics of the trading itself could work, there’s the in-game stock exchange that could be utilized but I think this would have to be expanded to cover off more than just the player and AI companies.
Investment Banking – This would cover activities such as M&A, IPOs and debt issuance. These all do or will happen in the game and banks could earn a tidy fee from doing so.
As a basic model, each city has a market for monthly $ amount for M&A, IPOs, etc. in the same way for any other “product”. This would be fairly volatile based on economic conditions. You would need an Investment Bank Office in the city to undertake these activities, setting up desks and hiring bankers of varying skill levels. The more bankers you hire, and the higher skill level they have, along with the fee you charge, the more of that market you capture. Higher skilled bankers mean you can charge a higher fee, similar to Product Quality.
Firstly, might I say I think Capitalism Lab is the best gamer ever! And really enjoying the new Digital Age DLC. Have been reading the posts about the Banking DLC with interest as this would be a great addition, and working in this industry have a few ideas which don't seem to have been discussed at all or in much detail. Please let me know your thoughts!
Banking / Checking Accounts
All major retail banks provide bank / checking accounts, I’ve not read anything about this in the threads so far. But please correct me if I’ve missed this.
I’d envisage this as being similar in nature to the mechanics of a subscription internet company in the Digital Age DLC – we would need an underpinning technology (e.g. researching a “Core Banking Platform”) and a monthly investment in “features” to provide an overall service quality. We can then set the monthly account fee per branch or per city, to generate a source of non-interest income for the bank.
This could be simplified and not assume any debit or credit balances, but personally I’d like to see these as another channel to both raise low-cost but low-value deposits that customers maintain in their account, and providing overdrafts to customers for a high-risk and high-return asset.
Also, as in real life banks often use these accounts to cross-sell their deposit and loan accounts. It would be good to see this dynamic also, so it becomes easier to generate market share of loans and deposits if you have a high market share of checking accounts. It would also make those deposits and loans more sticky with price, as customers prefer to have everything in one place.
I'd also love to see the ability to offer credit cards too!
Online Banking
As per in real life, it would be great if there is a shift later in the game away from traditional branch based banking and towards online and mobile banking.
This could be similar to the introduction of the e-commerce internet company in Digital Age DLC, so we would need to research another new technology (e.g. “Internet Banking Platform”) and either build a new internet company or add this as a unit within the existing Bank HQ. We could then take deposits, offer loans, and provide bank / checking accounts through the internet bank. As the reach of the internet bank grows, the footfall and balances held through the physical branches declines.
Branding / Advertising
This is a question, as I’m assuming this is being built in to the banking mechanics. How will this work? Will we advertise the retail bank in each branch, through the HQ, or both?
Payments Provider
As well as taking deposits and making loans, financial services companies provide the technology infrastructure for card and online payments, and make a healthy profit in doing so. Think VISA, MasterCard, American Express, etc. It would be great to have the option to go down this route as a payments provider.
Again, as a simplified model my thoughts are this could be offered with a required technology (e.g. “Payments Engine”) and a monthly investment in features to determine overall quality. The higher the quality, the higher the reach and market share of payments in each city (this could be the collective sum of all retail revenues in the city), and income generated from interchange fees. On the flip side, if you are playing as a retailer this results in an additional expense to manage through your pricing.
Corporate Bond Market
More a question than an idea. I am aware that this is already going to be part of the DLC, but is there going to be a secondary market for buying and selling these bonds?
Obviously in real life this is extremely common and companies can even buy back and cancel their bonds. The price of the bonds will rise and fall depending on the relative yield and the associated risk of the company (I assume the credit rating of the bond will change after it’s being issued, so if a company starts tanking the rating will drop and bond value plummets).
Investment Banking
This is a very complex business, but it would be awesome to be able to develop an investment bank. Here’s two potential ideas for how these could operate
Trading Desks – You set up a “trading desk” unit in an Investment Bank HQ, and through the talent system engine in the game can hire or headhunt a trader. The higher the skill level, the higher the salary (and bonus!) but also greater ability to make you money. You could then allocate a certain amount of the bank’s capital to each trading desk individually, set the level of risk you’re prepared to take (low, medium, high?) and they go off and do their thing.
You could also link the “trading desk” to a “research desk” (hiring a research analyst) to greater increase the probability of making money.
I’m not sure how the mechanics of the trading itself could work, there’s the in-game stock exchange that could be utilized but I think this would have to be expanded to cover off more than just the player and AI companies.
Investment Banking – This would cover activities such as M&A, IPOs and debt issuance. These all do or will happen in the game and banks could earn a tidy fee from doing so.
As a basic model, each city has a market for monthly $ amount for M&A, IPOs, etc. in the same way for any other “product”. This would be fairly volatile based on economic conditions. You would need an Investment Bank Office in the city to undertake these activities, setting up desks and hiring bankers of varying skill levels. The more bankers you hire, and the higher skill level they have, along with the fee you charge, the more of that market you capture. Higher skilled bankers mean you can charge a higher fee, similar to Product Quality.