The Fundamental of Banking

“If you want to change the world, the most important industry you can be in is financial services."

Jeremy Balkins

A group of students soon will become bankers. Great networking across different states!

           

What is a bank? How do banks contribute to the economy? What does a banker do? Is bank solely for business students? How does a bank generate revenue? Let alone, am I even qualify to become a banker?

These are the questions that came to my mind after my dad giving out advice before I even complete my Bachelor's degree. To be honest, I am just like any other student out there that has no idea what I'm gonna do after graduation. Perhaps build a successful career through my major that I took in the university. I was determined in 2016 that I'm gonna be a digital marketer that utilizes different channels to generate leads and build brand awareness. As technology becomes more vital, it demonstrates the importance of having digital platforms to showcase your business products that bring tremendous benefits to the businesses. 

Bank, is a financial institution that acts as an intermediary between depositor and borrower. Banks lending out money to borrowers in return for interest, while providing a place for safekeeping for their extra cash, jewelry, or other valuable items. Depositors will also get small interest as a return for their deposit with a certain period of time, which is known as a Time Deposit or Fixed Deposit. However, not all countries are giving out interests from their cash deposit while some reported 0% to the negative interest rates. Time Deposit can be a great tool in financial services too, but it depends on the customers’ needs and preferences. For instance, mandatory time deposit for “Malaysia My Second Home”, applying for a new credit card, short terms deposit, the convenience to withdraw money at any given time, or simply preferred low risk with various returns.

However, knowing the fact that a time deposit can sometimes have a lower interest return, the question again arises, how could you grow your money above the inflation rate, assuming your goal is to generate passive income aggressively with a higher return? Could your salary increment beat the inflation rate? Perhaps your investment portfolio giving out a steady return per annum? 

Generally speaking, usually banks have teams of licensed bankers to give out advice on financial planning. It is best to get an appointment for the construction of financial planning. Speaking of financial planning, banks also have many different divisions, however, they often have 5 main divisions which are retail banking, corporate banking, investment banking, private banking, and global banking. My experience as a licensed personal banker to premier relationship managers typically involves financial planning in retail banking. 

To become a banker in the sales line, it is salient to understand that having licenses are mandatory. In my personal experience, you will need the following professional certificates in order to introduce financial products to the clients, however, it still depends on the position and job description you applied for. In my case, these are my professional certificates and licenses in Malaysia that I acquired (except CPRE) since I started my career in the banking sector: 

1. Investor Protection Professional Certification (IPPC) for Structured Financial Products

2. Computerised Unit Trust Examination (CUTE) for Unit Trust 

3. Certificate Examination in Investment-Linked Life Insurance for Life Insurance with investment-linked

4. Pre Contract Examination for Insurance Agent Life Insurance (Part A & C) for Life Insurance

5. Pre Contract Examination for Insurance Agent General Insurance (Part A & B) for *General Insurance

General Insurance involves Fire insurance, Car insurance, House insurance and etc.

6. Takaful Basic Examination (TBE; Part A, B & C) for Takaful Insurance

7. Computerised Private Retirement Scheme Examination (CPRE) for Private Retirement Scheme

However, these are not the only certificates available in the market, there are plenty of them while different positions might require different types of professional certificates and knowledge. To some extent, there are also global standard professional certificates such as Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Certified Risk Manager (CRM), or Chartered Certified Accountant (ACCA) to name a few. 

I understand, some might say there is still a long way to become a licensed personal banker since there are plenty of exams. I agree, but it depends on individual capability, passion, and values. Some could complete all the exams in the same year, some might take a few years while others might need more time. In my personal experience, you can pass the exam as long as you study the learning materials. Most importantly is your passion. As Steve Jobs once said, "You've got to find what you love", and this is what I love to do - to help my clients in providing world-class financial solutions. With these professional certificates, you are not only open a new door for a new opportunity to yourself to build your career in the bank, but also to other licensed agencies in the market as a part-time or full-time advisor. 

The aims of the banking systems, together with all the licenses and professional certificates are to provide confidence in the market and to provide security in the economy. That's where the banks play an important role in lending out money as a loan to businesses to enable them to invest and expand, which is essential for the national economy as it contributes to the well-being of the society by employing more workers that engendered to increases in purchasing power, import and export goods. To individuals, when they have more income, it allows them to borrow instant cash via personal financing and/or credit cards or buying a new car (higher purchase) or a new house (mortgage). All of which, contribute to the overall country's GDP (Gross Domestic Product). To answer the question, yes! Banks are essentially important to the economy and the country. The bank is not giving you a mortgage, but a home for your family. It is not simply about life insurance, they are selling you security for your family, and it is not all about investments in your portfolio and the best fund to generate passive income, instead, it is building your retirement. The bank also funds start-up companies that could become the next major competitors that could possibly employ thousands of new employees. With these perspectives and mindsets, you will see it differently. 



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