Learn the top five things you need to know about the finance industry in Britain
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| INTRODUCTION |
| Kellie: The Top Five Facts About British Finance. |
| Gina: We’ll introduce British finance to you by talking about some of the most important aspects of the industry. |
Lesson focus |
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| Kellie: So let’s get started with number 5 on our list and it’s that finance is a necessary evil. |
| Gina: The general public doesn’t have a good view of the finance industry. |
| Kellie: I don’t think so either. If you think of the finance industry you think of people making obscene amounts of money by playing with other people’s money. Fatcat bankers and shouting stock brokers. |
| Gina: I think that the image of them has become worse over the last couple of years due to the global recession. |
| Kellie: Yeah, people not only blame the banks for some of the problems but it has resulted in falling house prices, bad credit and other things that have made life more difficult. |
| Gina: But, society couldn’t function without a finance industry. We need someone to look after our money and keep it moving. |
| Kellie: That’s true. Businesses need things such as loans and sales of stocks to grow and as individuals we need financial services too. |
| Gina: Yeah, we may not like the finance industry at times, but we need it. |
| Kellie: I guess we do. Our number 4 is that it has its own vocabulary. |
| Gina: Every area of the finance world has its own words and acronyms. Even the basic stuff that the general public deal with is littered with terms such as APR and overdraft. |
| Kellie: Yeah, most native speakers that deal with their own finances even at the lowest level know what APR and an overdraft is, but they’re still finance specific terms. |
| Gina: They’ve become common knowledge due to their use in everyday life. Most people deal with credit cards and bank accounts so those words are easy. However, more complex finance transactions and areas use words that aren’t as common. |
| Kellie: Like what? |
| Gina: Do you know what escrow means? Or cliquet? |
| Kellie: I’ve heard of escrow but I’ve never heard of cliquet. |
| Gina: They are both quite specific terms that most people will never have the need to know. Escrow refers to the holding of money by a third party in a transaction and cliquet is a form of option to buy an asset at a later date. |
| Kellie: Yeah, very specific! I doubt I’ll ever hear either term again. |
| Gina: Probably not, unless you change careers and move into finance. |
| Kellie: There are too many new words to learn! Now onto number 3 – finance is competitive. |
| Gina: Every industry is competitive. It doesn’t matter whether it is the food industry, car industry or entertainment industries – every company is trying to make more money and increase its market share. |
| Kellie: And the finance industry isn’t any different. |
| Gina: Of course not! The finance companies all want to have control of as much of our money as possible. It doesn’t matter if they’re a bank that will deposit it safely into an account or a company that will invest it into riskier ventures. They all want our money. |
| Kellie: And there are so many companies competing for our money. There are so many banks offering so many different types of bank accounts, for example. |
| Gina: That’s right. There are so many companies offering similar services that they have to try and stand out from the crowd in order to get more business. |
| Kellie: So that’s why you see different interest rates or incentives to open an account. |
| Gina: Exactly. There are other forms of competition too. Stockbrokers are trying to outperform each other and bring in higher returns than their peers as it will lead to more work and bigger bonuses. Money gets spread around different companies and they all have to prove they’re the best and safest place to keep the cash. |
| Kellie: Right. Number 2 is that it is very complex. |
| Gina: We touched on this a little earlier with number four. |
| Kellie: That finance has its own vocabulary. |
| Gina: Yes. For a lot of people, finance doesn’t get any more complicated than choosing what bank account to open, whether to have a savings account or an ISA or which loan to take. |
| Kellie: Or which credit card deal is the best. |
| Gina: Do you have a lot of credit cards? |
| Kellie: A few… but that’s not the topic! I suppose that for those in the finance industry it’s a lot more complicated that transferring balances between credit cards. |
| Gina: It’s a lot more complicated and complex. When you are dealing with millions of pounds all day everyday, there is a lot more to think about and worry about than an ISA or credit card interest rates. |
| Kellie: I can’t even imagine. Whether the money belongs to the company itself or whether they are dealing with it for a customer, there must be thousands of different choices available. |
| Gina: There are many saving schemes and investment schemes to consider. They may be operating under complex circumstances, such as options on investments. |
| Kellie: It’s a good job that they do have all of this new vocabulary to explain things! |
| Gina: I think so too! |
| Kellie: That leaves just our number 1 most important thing you need to know about British finance. |
| Gina: What is it? |
| Kellie: Do you want to know? |
| Gina: Of course! |
| Kellie: It’s that the main focus of the finance industry is to increase revenue and profit. |
| Gina: Ah… that sounds obvious but it can be overlooked sometimes. We’ve talked about increasing money for the customers, but, naturally, the finance companies themselves also want to increase their own revenues and profits. |
| Kellie: And the two are linked, aren’t they? If the company increases the customer’s money or manages it well, then the company’s profit will increase. |
| Gina: Yeah, a lot of payment in these circumstances is paid on a percentage so the more money made for the customer, the more money for the company. |
| Kellie: I guess the finance companies are selling cash, instead of food or energy or anything else. |
| Gina: They’re selling services too, but really it is mainly cash. |
| Kellie: Okay, that’s all for this lesson. |
Outro |
| Gina: Yes, thanks for listening, and we’ll see you next time! |
| Kellie: Bye-bye! |
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