1. Understand the banking system.
Objective 4.01
Understand the banking system.

2. Classification of Financial Institutions
Depository Institutions
Earn money to finance their business by accepting deposits from customers
Types include:
Commercial banks, which offer many different services, including savings, loans, and checking accounts.
Savings and loan associations (S&Ls), which traditionally specialize in savings and home loans, but now are very similar to commercial banks.
Mutual savings banks, which are owned by the depositors and specialize in savings and home loans.
Credit unions, which are not-for profit, serve their members only, and are owned by their depositors.

3. Classification of Financial Institutions cont.
Non-Depository Financial Institutions
Earn money to finance their business by selling specific services such as policies, investments, and loans
Types include:
Life insurance companies
Investment companies
Consumer finance companies
Mortgage companies
Check-cashing outlets
Pawnshops

4. Classification of Financial Institutions cont.
Which characteristics of financial institutions are used for comparing them?
Services offered
Safety
Convenience
Fees and charges
Restrictions

5. Financial Service Offerings
Payment Services
Savings Services
Lending Services
Electronic Banking
Storage of Valuables
Investment Advice
Management of Trusts

6. Financial Institution Selection:
Questions to ask about each type:
Services –Does the institution offer savings, checking, loans, credit cards, safe deposit boxes, trusts, etc?
Safety – Does the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insure the institution against losses?

7. How do Banks make money?

8. Move to Electronic Banking
E-Banking Services
ATMs
Point-of-Sale Payments
Direct Deposit
Automatic Bill Payment
Payment Options
Debit Cards
Online
Stored Value Cards
Smart Cards
Mobile Banking
Smart Phone / iPad
Text
Online Browser
Apps