Commercial Banking Application Quiz!

IBISWorld Industry Reports help large banks by assisting them in identifying high-risk industries within their classification. These reports provide valuable insights and analysis on various industries, helping banks assess the potential risks associated with lending or investing in specific sectors. By identifying high-risk industries, banks can make more informed decisions and mitigate potential financial risks.

Underwriters do not work on a commission basis. Their role is to assess the risk associated with a loan application and determine whether it meets the lender's criteria. Their decision is based on objective factors such as the applicant's creditworthiness and ability to repay the loan, rather than any financial incentive. Therefore, the statement that underwriters have added incentive to approve a loan is false.

IBISWorld helps Commercial Banks to support their Relationship Managers, Credit Analysts, and Loan Officers to create more loans, better loans, and more diversified loans. This means that IBISWorld provides assistance to these professionals in order to generate a wider range of loans, which helps to minimize risk and increase the bank's profitability. By offering a variety of loan options, Commercial Banks can cater to the diverse needs of their customers and ensure a more balanced loan portfolio. This ultimately leads to a more sustainable and successful lending strategy for the bank.

IBISWorld developed the Industry Risk Rating product through a partnership with the Risk Management Association. This organization is a not-for-profit association that focuses on promoting effective risk management practices in the business industry. By partnering with the Risk Management Association, IBISWorld was able to leverage their expertise and industry knowledge to develop a comprehensive and reliable risk rating product for their customers.

This question is the least appropriate because it is not directly related to commercial banking. It focuses on the client's internal recruitment practices rather than their banking needs and preferences. The other questions are more relevant to understanding the client's business and banking requirements.

The statement is false because the question states that banks are the second-biggest client group in the US and Australia, which implies that there is another client group that is bigger. Therefore, the correct answer is False.

IBISWorld helps Commercial Banks to deliver more diversified loans by ensuring that the bank is not overexposed to too many related industries through the use of the Industry Wizard. This feature helps banks assess the level of risk associated with lending to specific industries and prevents them from concentrating too much of their loan portfolio in a single sector. By avoiding overexposure, banks can spread their risk and improve the overall stability of their loan portfolio.

Risk Reports are best suited to provide a Commercial Bank with data to input into the Credit Scorecard system. Risk Reports provide detailed information about the potential risks associated with specific industries or companies. This information can be used to assess the probability of a customer defaulting and to make more informed decisions about lending. By analyzing the data in Risk Reports, the Commercial Bank can input relevant information into the Credit Scorecard system and improve the accuracy of its predictions.

iExpert is the best-suited IBISWorld product for Loan Officers/Relationship Managers at Commercial Banks because it provides them with fast facts and targeted questions across many verticals. iExpert is a comprehensive database that offers detailed industry information, including key statistics, trends, and analysis. This allows Loan Officers to quickly access the necessary information and ask relevant questions to make informed lending decisions.

The Industry Wizard would be the most useful IBISWorld product for a bank looking to quickly identify industries in the Growth Stage of their Life Cycle, with low Barriers to Entry and medium to high Capital Intensity. The Industry Wizard provides comprehensive industry data and analysis, including information on industry life cycles, barriers to entry, and capital intensity. It allows banks to quickly and easily identify industries that meet their specific criteria, helping them in their business development efforts.

The correct answer includes Chief Credit Officer, Head of Business Banking, Knowledge Center, Head of Commercial Banking, and Chief Economist. These positions are targeted when prospecting a Commercial Bank because they are key decision-makers and influencers in the bank's credit, business banking, commercial banking, and economic departments. The Chief Credit Officer is responsible for overseeing the bank's credit policies and approving loans. The Head of Business Banking and Head of Commercial Banking are responsible for managing relationships with business clients and driving business growth. The Knowledge Center provides research and insights to support the bank's decision-making. The Chief Economist provides economic analysis and forecasts to guide the bank's strategies.

Basel III was developed in response to the credit crisis and aims to improve banks' ability to handle financial and economic stress. It includes multiple measures to achieve this goal. Firstly, it requires banks to set aside more capital to cover risks, which enhances their financial stability. Secondly, it imposes limits on balance sheets and increases disclosure, promoting transparency and reducing excessive risk-taking. Lastly, it establishes standards for monitoring liquidity, requiring all banks to pass a 30-day stress test. Therefore, all of the above options are correct influences of Basel III.

The Supply Chain section of the IBISWorld Industry Report would be most useful to a Commercial Bank that wants to map industry families and identify potential issues from buy-side or sell-side. This section provides information on the interconnected relationships between different industries, including suppliers, customers, and competitors. By understanding the supply chain dynamics, a Commercial Bank can assess the potential risks and opportunities associated with specific industries and make informed decisions regarding portfolio and risk management.

The Key Statistics section of an Industry Report is most likely to be used by Marketing, Credit/Risk Analyst, Research Analyst/Economics, and Business Development roles/areas of a Commercial Bank. These roles/areas require access to key statistical data and analysis to make informed decisions regarding marketing strategies, credit and risk assessment, economic research, and business development opportunities.

The testimonial states that Centrue Bank uses key reports and sections such as iExpert, Competitive Landscape, Market Share Concentration, and Risk Rating Reports to help them in their work. However, it specifically mentions that understanding real world risks in the industry and asking appropriate questions makes the banker appear knowledgeable to customers, which suggests that the Market Share Concentration and Competitive Landscape chapters would be particularly useful to Centrue in understanding industry risks and improving client relationships.