1-1 The Financial System and Competing Financial-Service Institutions (continued) Leading Competitors with Banks Financial-service providers are converging in terms of the services they offer The U.S. Financial Services Modernization (Gramm- Leach-Bliley) Act of 1999 has allowed many different types of financial firms to offer the public one-stop shopping for financial services The challenge of differentiating banks from other financial-service providers is difficult today Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

1-2 EXHIBIT 1–2 Comparative Size by Industry of Commercial Banks and Their Principal Financial-Service Competitors Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

Services Banks and Many of Their Closest Competitors Offer the Public 1-3 Services Banks and Many of Their Closest Competitors Offer the Public Services Banks Have Offered for Centuries Carrying Out Currency Exchange Discounting Commercial Notes and Making Business Loans Offering Savings Deposits Safekeeping of Valuables and Certification of Value Supporting Government Activities with Credit Offering Checking Accounts (Demand Deposits) Offering Trust Services Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

1-4 Services Banks and Many of Their Closest Competitors Offer the Public (continued) Services Banks and Many of Their Financial-Service Competitors Began Offering in the Past Century Granting Consumer Loans Financial Advising Managing Cash Offering Equipment Leasing Making Venture Capital Loans Selling Insurance Policies Selling and Managing Retirement Plans Dealing in Securities: Offering Security Brokerage and Investment Banking Services Offering Mutual Funds, Annuities, and Other Investment Products Offering Merchant Banking Service Offering Risk Management and Hedging Services Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

1-5 TABLE 1–1 The Many Different Roles Banks and Their Closest Competitors Play in Today’s Economy Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

TABLE 1–2 Some of the Leading Financial-Service Firms around the Globe 1-6 TABLE 1–2 Some of the Leading Financial-Service Firms around the Globe Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

1-7 Key Trends Affecting All Financial-Service Firms – Crisis, Reform, and Change Service Proliferation Rising Competition Government Deregulation and then Reregulation Crisis, Reform, and Change in Banking and Financial Services An Increasingly Interest-Sensitive Mix of Funds Technological Change and Automation Consolidation and Geographic Expansion Convergence Globalization Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

1-8 Quick Quiz What is a bank? How does a bank differ from most other financial- service providers? Why are some banks reaching out to become one-stop financial- service conglomerates? Is this a good idea? Which businesses are banking’s closest and toughest competitors? What services do they offer that compete directly with banks’ services? What is happening to banking’s share of the financial marketplace and why? How have banking and the financial-services market changed in recent years? What powerful forces are shaping financial markets and institutions today? Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

Appendix: Career Opportunities in Banking and Financial Services 1-9 Appendix: Career Opportunities in Banking and Financial Services What different kinds of professionals work inside financial firms? Loan Officers Credit Analysts Managers of Operations Branch Managers Systems Analyst Auditing and Control Personnel Trust Department Specialist Tellers Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

1-10 Appendix: Career Opportunities in Banking and Financial Services (continued) What different kinds of professionals work inside financial firms? Security Analysts and Traders Marketing Personnel Human Resources Managers Investment Banking Specialists Bank Examiners and Regulators Regulatory Compliance Officers Risk Management Specialists Copyright © 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.