Chapter 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
Introduction to Business
© Thomson South-Western
LESSON 17-1
Banks and Other Financial
Institutions
Goals
 Explain the purpose of the Federal
Reserve System.
 List the types of financial institutions.
 Discuss factors for selecting a financial
institution.
Chapter 17
Slide 2
Introduction to Business
© Thomson South-Western
Key Terms
 Federal Reserve System (Fed)
 commercial bank
 credit union
 Federal Deposit Insurance Corporation
(FDIC)
Chapter 17
Slide 3
Introduction to Business
© Thomson South-Western
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.
Chapter 17
Slide 4
Introduction to Business
© Thomson South-Western
Chapter 17
Slide 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 17
Slide 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 17
Slide 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 17
Slide 8
Introduction to Business
© Thomson South-Western
TYPES OF FINANCIAL
INSTITUTIONS
Chapter 17
Slide 9
Introduction to Business
© Thomson South-Western
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
Chapter 17
Slide 10
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 17
Slide 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 17
Slide 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 17
Slide 13
Introduction to Business
© Thomson South-Western
TYPES OF FINANCIAL
(continued)
INSTITUTIONS
 Non-deposit financial institutions






Life insurance companies
Investment companies
Consumer finance companies
Mortgage companies
Check-cashing outlets
Pawnshops
Chapter 17
Slide 14
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What are some examples of non-deposit
financial institutions?
Chapter 17
Slide 15
Introduction to Business
© Thomson South-Western
SELECTING A FINANCIAL
INSTITUTION
 Services offered




Savings accounts
Checking and payment accounts
Loans and other credit plans
Other services, such as safe deposit boxes
Chapter 17
Slide 16
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 17
Slide 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 17
Slide 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 17
Slide 19
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What factors should be considered when
selecting a financial institution?
Chapter 17
Slide 20
Introduction to Business
© Thomson South-Western
LESSON 17-2
Financial Services and
Electronic Banking
Goals
 Identify the financial services used by
consumers.
 Explain types of checking accounts.
 Describe electronic banking activities.
Chapter 17
Slide 21
Introduction to Business
© Thomson South-Western
Key Terms
 safe-deposit box
 service charge
 debit card
Chapter 17
Slide 22
Introduction to Business
© Thomson South-Western
TYPES OF FINANCIAL
SERVICES
 Savings services
 Payment services
 Lending services
 Electronic banking
 Storage of valuables
 Investment advice
 Management of trusts
Chapter 17
Slide 23
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What are the main financial services used
by consumers?
Chapter 17
Slide 24
Introduction to Business
© Thomson South-Western
TYPES OF CHECKING
ACCOUNTS
 Regular checking accounts
 Interest-earning
 Checking accounts
 Special checking accounts
Chapter 17
Slide 25
Introduction to Business
© Thomson South-Western
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
Chapter 17
Slide 26
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What are three main types of checking
accounts?
Chapter 17
Slide 27
Introduction to Business
© Thomson South-Western
ELECTRONIC BANKING
 E-banking services




Automatic teller machines
Payments at the point-of-sale
Direct deposit
Automatic bill payments
Chapter 17
Slide 28
Introduction to Business
© Thomson South-Western
ELECTRONIC PAYMENT
OPTIONS
 Debit card transactions
 Online payments
 Stored-value cards
 Smart cards
Chapter 17
Slide 29
Introduction to Business
© Thomson South-Western
BANKING IN THE FUTURE
 Financial services combined with
wireless technology
 Personalized systems for obtaining,
transferring, and using funds
Chapter 17
Slide 30
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What are common electronic banking
services?
Chapter 17
Slide 31
Introduction to Business
© Thomson South-Western
LESSON 17-3
Checks and
Payment Methods
Goals
 Describe three main types of
endorsements.
 Describe proper check-writing
procedures.
 Explain the bank reconciliation process.
 Identify other payment methods.
Chapter 17
Slide 32
Introduction to Business
© Thomson South-Western
Key Terms
 endorsement
 check register
 stop payment order
 bank statement
 bank reconciliation
 outstanding checks
Chapter 17
Slide 33
Introduction to Business
© Thomson South-Western
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
Chapter 17
Slide 34
Introduction to Business
© Thomson South-Western
THE FIRST DEPOSIT
 Signature card
 Joint account
 Deposit slip
Chapter 17
Slide 35
Introduction to Business
© Thomson South-Western
SIGNATURE CARD
Chapter 17
Slide 36
Introduction to Business
© Thomson South-Western
TYPES OF
ENDORSEMENTS
 Blank endorsement
 Full endorsement
 Restrictive endorsement
 Special endorsement
 Two signatures required
 Restrictive endorsement
Chapter 17
Slide 37
Introduction to Business
© Thomson South-Western
SAMPLE ENDORSEMENTS
Chapter 17
Slide 38
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What are the three types of
endorsements?
Chapter 17
Slide 39
Introduction to Business
© Thomson South-Western
USING A
CHECKING ACCOUNT
 Check-writing procedures




Elements of a check
The check register
Writing a check
Proper check writing
 Stopping payment
Chapter 17
Slide 40
Introduction to Business
© Thomson South-Western
PARTS OF A CHECK
Chapter 17
Slide 41
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
What is the purpose of a check register?
Chapter 17
Slide 42
Introduction to Business
© Thomson South-Western
THE RECONCILIATION
PROCESS
 Bank statement information
 Determine checks paid
 Find differences
 Calculate adjusted balance
Chapter 17
Slide 43
Introduction to Business
© Thomson South-Western
MONTHLY ACCOUNT STATEMENT
Chapter 17
Slide 44
Introduction to Business
© Thomson South-Western
RECONCILIATION FORM
Chapter 17
Slide 45
Introduction to Business
© Thomson South-Western
>> 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?
Chapter 17
Slide 46
Introduction to Business
© Thomson South-Western
OTHER TYPES
OF PAYMENTS
 Certified checks
 Cashier’s checks
 Traveler’s checks
 Money orders
Chapter 17
Slide 47
Introduction to Business
© Thomson South-Western
CERTIFIED CHECKS
 Personal check for which a bank has
guaranteed payment
 Certification stamped on face
 Signed or initialed by a bank officer
Chapter 17
Slide 48
Introduction to Business
© Thomson South-Western
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
Chapter 17
Slide 49
Introduction to Business
© Thomson South-Western
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
Chapter 17
Slide 50
Introduction to Business
© Thomson South-Western
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
Chapter 17
Slide 51
Introduction to Business
© Thomson South-Western
>> C H E C K P O I N T
How does a certified check differ from a
cashier’s check?
Chapter 17
Slide 52
Introduction to Business
© Thomson South-Western