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17. Banking and Financial Services. 17-1 Banks and Other Financial Institutions 17-2 Financial Services and Electronic Banking 17-3 Checks and Payment Methods. LESSON 17-1 Banks and Other Financial Institutions. Goals Explain the purpose of the Federal Reserve System. - PowerPoint PPT Presentation
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Introduction to Business© Thomson South-Western
ChapterChapter
Banking and Financial Services17-117-1 Banks and Other Financial
Institutions17-217-2 Financial Services and Electronic
Banking17-317-3 Checks and Payment Methods
1717
Introduction to Business© Thomson South-Western
Chapter 17Slide 2
LESSON 17-1
Banks and Other Financial InstitutionsGoals Explain the purpose of the Federal
Reserve System. List the types of financial institutions. Discuss factors for selecting a financial
institution.
Introduction to Business© Thomson South-Western
Chapter 17Slide 3
Key Terms Federal Reserve System (Fed) commercial bank credit union Federal Deposit Insurance Corporation
(FDIC)
Introduction to Business© Thomson South-Western
Chapter 17Slide 4
THE BANKING SYSTEM The Federal Reserve System (Fed)
Main purpose is to supervise and regulate member banks and to help banks serve the public efficiently
All national banks are required to join – becoming member banks.
United States divided into 12 districts with a central Federal Reserve Bank in each district.
Introduction to Business© Thomson South-Western
Chapter 17Slide 5
Introduction to Business© Thomson South-Western
THE BANKING SYSTEM Federal Reserve activities
Supervise banks Holding of reserves – banks are required to
keep a part of the money they receive from customers on deposit in case the banks need additional funds to meet the daily customer demand
As a clearinghouse Uses electronic funds transfer (EFT) to pay
checks among different banks in different cities
Chapter 17Slide 6
Introduction to Business© Thomson South-Western
THE BANKING SYSTEM Banking and the Economy
The savings you and others deposit make banking services possible. Deposits do not remain idle in the bank, they are put to work.
Chapter 17Slide 7
Introduction to Business© Thomson South-Western
Some of the activities for which banking services are used include: Building homes Starting new businesses Planting crops Financing educations Buying goods Paving streets Investing for retirement Building hospitals
These activities create jobs and economic growth.
Chapter 17Slide 8
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TYPES OF FINANCIAL INSTITUTIONSChapter 17Slide 9
Introduction to Business© Thomson South-Western
Chapter 17Slide 10
Deposit Institutions Commercial banks
Most common bank organization Also known as full-service bank because
they offer services such as: Checking accounts Savings accounts Loans to businesses and individuals
May find branches in shopping centers and grocery stores
Introduction to Business© Thomson South-Western
Deposit Institutions Savings and loan associations
Traditionally specialized in savings accounts and making loans for home mortgages
Recently have expanded to offer a wider variety of services
Chapter 17Slide 11
Introduction to Business© Thomson South-Western
Deposit Institutions Mutual savings banks
A savings bank that is owned by, and operated for the benefit of, its depositors.
Profits are distributed in proportion to the amount of business each participant does with the company.
Organized mainly for savings and home loans.
Located mainly in the northeastern United States.
Chapter 17Slide 12
Introduction to Business© Thomson South-Western
Deposit Institutions Credit unions
User-owned, not-for-profit, cooperative financial institution
Comprised of people in the same company, government agency, or profession
Accept savings deposits and make loans Regulated by NCUA, the National Credit
Union Administration
Chapter 17Slide 13
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Chapter 17Slide 14
TYPES OF FINANCIAL INSTITUTIONS Non-deposit financial institutions
Life insurance companies Investment companies Consumer finance companies Mortgage companies Check-cashing outlets Pawnshops
(continued)
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Chapter 17Slide 15
>> C H E C K P O I N T
What are some examples of non-deposit financial institutions?
Introduction to Business© Thomson South-Western
Chapter 17Slide 16
SELECTING A FINANCIAL INSTITUTION Services offered
Savings accounts Checking and payment accounts Loans and other credit plans Other services, such as safe deposit boxes
Introduction to Business© Thomson South-Western
SELECTING A FINANCIAL INSTITUTION Safety
Federal Deposit Insurance Corporation (FDIC) helps to regulate banks and protects depositors’ money in case of the failure of a bank
Insures all accounts in the same name at each bank up to an amount of $100,000 (temporarily increased by the government to $250,000 per depositor through December 31, 2009)
Chapter 17Slide 17
Introduction to Business© Thomson South-Western
SELECTING A FINANCIAL INSTITUTION Convenience
24-hour banking Branch offices in convenient locations ATMs in convenient locations On-line banking
Chapter 17Slide 18
Introduction to Business© Thomson South-Western
SELECTING A FINANCIAL INSTITUTION Fees and charges
Compare your needs with the price you pay
Watch for hidden fees such as ATM fees Restrictions
Minimum deposit requirements Amount Time
Chapter 17Slide 19
Introduction to Business© Thomson South-Western
Chapter 17Slide 20
>> C H E C K P O I N T
What factors should be considered when selecting a financial institution?
Introduction to Business© Thomson South-Western
Chapter 17Slide 21
LESSON 17-2
Financial Services and Electronic BankingGoals Identify the financial services used by
consumers. Explain types of checking accounts. Describe electronic banking activities.
Introduction to Business© Thomson South-Western
Chapter 17Slide 22
Key Terms safe-deposit box service charge debit card
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Chapter 17Slide 23
TYPES OF FINANCIAL SERVICES Savings services Payment services Lending services Electronic banking Storage of valuables Investment advice Management of trusts
Introduction to Business© Thomson South-Western
Chapter 17Slide 24
>> C H E C K P O I N T
What are the main financial services used by consumers?
Introduction to Business© Thomson South-Western
Chapter 17Slide 25
TYPES OF CHECKING ACCOUNTS Regular checking accounts Interest-earning Checking accounts Special checking accounts
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Chapter 17Slide 26
COMPARING CHECKING ACCOUNTS Minimum balance Interest rate earned, if any Monthly service charge Fees for other services, such as
printing checks and stop payment orders
Other restrictions
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Chapter 17Slide 27
>> C H E C K P O I N T
What are three main types of checking accounts?
Introduction to Business© Thomson South-Western
Chapter 17Slide 28
ELECTRONIC BANKING E-banking services
Automatic teller machines Payments at the point-of-sale Direct deposit Automatic bill payments
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Chapter 17Slide 29
ELECTRONIC PAYMENTOPTIONS Debit card transactions Online payments Stored-value cards Smart cards
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Chapter 17Slide 30
BANKING IN THE FUTURE Financial services combined with
wireless technology Personalized systems for obtaining,
transferring, and using funds
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Chapter 17Slide 31
>> C H E C K P O I N T
What are common electronic banking services?
Introduction to Business© Thomson South-Western
Chapter 17Slide 32
LESSON 17-3
Checks and Payment MethodsGoals Describe three main types of
endorsements. Describe proper check-writing
procedures. Explain the bank reconciliation process. Identify other payment methods.
Introduction to Business© Thomson South-Western
Chapter 17Slide 33
Key Terms endorsement check register stop payment order bank statement bank reconciliation outstanding checks
Introduction to Business© Thomson South-Western
Chapter 17Slide 34
OPENING A CHECKING ACCOUNT Benefits of checking accounts
Convenience and ease of making payments
Safety to make payments with less risk than using cash
Proof of payment A record of finances for managing your
money
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Chapter 17Slide 35
THE FIRST DEPOSIT Signature card Joint account Deposit slip
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Chapter 17Slide 36
SIGNATURE CARD
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Chapter 17Slide 37
TYPES OF ENDORSEMENTS Blank endorsement Full endorsement Restrictive endorsement
Special endorsement Two signatures required Restrictive endorsement
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Chapter 17Slide 38
SAMPLE ENDORSEMENTS
Introduction to Business© Thomson South-Western
Chapter 17Slide 39
>> C H E C K P O I N T
What are the three types of endorsements?
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Chapter 17Slide 40
USING A CHECKING ACCOUNT Check-writing procedures
Elements of a check The check register Writing a check Proper check writing
Stopping payment
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Chapter 17Slide 41
PARTS OF A CHECK
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Chapter 17Slide 42
>> C H E C K P O I N T
What is the purpose of a check register?
Introduction to Business© Thomson South-Western
Chapter 17Slide 43
THE RECONCILIATION PROCESS Bank statement information Determine checks paid Find differences Calculate adjusted balance
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Chapter 17Slide 44
MONTHLY ACCOUNT STATEMENT
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Chapter 17Slide 45
RECONCILIATION FORM
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Chapter 17Slide 46
>> C H E C K P O I N T
What are causes of differences between the bank statement balance and a person’s check register?
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Chapter 17Slide 47
OTHER TYPES OF PAYMENTS Certified checks Cashier’s checks Traveler’s checks Money orders
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Chapter 17Slide 48
CERTIFIED CHECKS Personal check for which a bank has
guaranteed payment Certification stamped on face Signed or initialed by a bank officer
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Chapter 17Slide 49
CASHIER’S CHECKS Check that a bank draws on its own
funds Costs the amount of the check plus a
service fee More acceptable than the personal
checks
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Chapter 17Slide 50
TRAVELER’S CHECKS Special forms designed for making
payments when away from home Require your signature in two places Cash a check or pay for a purchase Commonly accepted throughout the
world
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Chapter 17Slide 51
MONEY ORDERS Form of payment that orders the issuing
agency to pay the amount printed on the form to another party
A bank money order A postal money order An express money order A telegraphic money order
Introduction to Business© Thomson South-Western
Chapter 17Slide 52
>> C H E C K P O I N T
How does a certified check differ from a cashier’s check?
