Capitalism 2 and Capitalism Lab Forum

Do you think the incumbency advantage for established banks should be improved in the way described below?

This is the original user post that suggests making the change.

There is not enough of an incumbency advantage for established banks (in real life banking is a scale business with high barriers to entry). In real life, established banks also have a significant funding cost advantage over new players. One way to do this is to differentiate between 'transactional' deposits which don't pay interest (or pay very little interest), and time deposits which pay a lot of interest (closer to central bank benchmark rates). What you could do is tie the level of customer service rating, brand, wait times etc to the amount of 'core' (transactional, low cost) deposits. As a bank invests in its network and customer service and brand, a greater share of their deposits come from transactional deposits which have a much lower interest rate (and are also much slower to change, and reflect relative brand/service quality etc more than rates), whereas anyone can pay up to get a lot of time deposits fast (where share should change more quickly and be rate sensitive). That way there is a greater reward to investing in customer service, brand, and the number of branches, in the form of lower funding costs. It also gives existing incumbants and advantage over new entrants.

To see the original user post: http://www.capitalism2.com/forum/viewto ... 044#p29050


Update: please vote for a follow-up poll about the method for implementing the incumbency advantage for established banks at:
http://www.capitalism2.com/forum/viewto ... =52&t=7121

Yes, but I would keep the overall profitability for established players commensurate to where it is now or lower.

buells wrote: ↑Sat Dec 07, 2019 12:06 am Yes, but I would keep the overall profitability for established players commensurate to where it is now or lower.

Could you please elaborate on this?

Banking just seems to bring in too much money in general compared to other activities. Maybe I need to increase the amount of competition in the sector, but that aside, even with low savings and low net interest margin settings, the bank brings in a boatload of cash.

buells wrote: ↑Mon Dec 09, 2019 4:45 am Banking just seems to bring in too much money in general compared to other activities. Maybe I need to increase the amount of competition in the sector, but that aside, even with low savings and low net interest margin settings, the bank brings in a boatload of cash.

Please vote on this post to help us assess the gameplay balance on banks' profitability: http://www.capitalism2.com/forum/viewto ... =52&t=6997

Update: please vote for a follow-up poll about the method for implementing the incumbency advantage for established banks at:
http://www.capitalism2.com/forum/viewto ... =52&t=7121

Update: in the upcoming version 6.3.00, the brand rating of a bank will have a bigger effect on retaining its customer, and serve as a similar function as the the incumbency advantage for established banks.

Subsequently dev team has decided not to implement additional incumbency advantage for established banks for the concern that any additional incumbency advantage for established banks will make new banks even harder to compete.