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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.
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Introduction to Business
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Key Terms
 Federal Reserve System (Fed)
 commercial bank
 credit union
 Federal Deposit Insurance Corporation
(FDIC)
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THE BANKING SYSTEM
 The Federal Reserve System (Fed)
 Supervise and regulate member banks
 Bank for the banks, not an individual account
 All national banks members, state banks may join.
 Federal Reserve activities
 Holding of Reserves
 Clearing of Checks
 Change the interest rate
 Banking and the economy
 Allows others to use deposited funds
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>> C H E C K P O I N T
What is the main purpose of the Federal
Reserve System?
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TYPES OF FINANCIAL INSTITUTIONS
 Deposit institutions
 Commercial banks
 Full Service Banks, offer a wide range of services
 Savings and loan associations
 Specialize in savings accounts and home loans
 Mutual savings banks
 Owned by, and operated for its depositors. Savings
and Home Loans
 Credit unions
 User Owned, not for profit. Accept savings deposits
and loans (personal and business), checking
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TYPES OF FINANCIAL
(continued)
INSTITUTIONS
 Non-deposit financial institutions
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Life insurance companies
Investment companies
Consumer finance companies
Mortgage companies
Check-cashing outlets
 For those without a bank account
 Pawnshops
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>> C H E C K P O I N T
Types of Institutions Worksheet
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SELECTING A FINANCIAL
INSTITUTION
 Services offered
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Savings accounts
Checking and payment accounts
Loans and other credit plans
Other services, such as safe deposit boxes
Safety – FDIC insures up to $100,000. 99% are members
Convenience – Hours, locations, online services
Fees and charges
Restrictions
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SELECTING A FINANCIAL INSTITUTION
Group Discovery
 Wells Fargo
 US Bank
 West Bank
 Bank of the West
 Iowa State Bank
 Veridian Credit Union
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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.
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Key Terms
 safe-deposit box
 service charge
 debit card
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TYPES OF FINANCIAL
SERVICES
 Savings services – Safe Storage of Money
 Payment services – Transfer of Money
 Lending services – Loans – Individual or Business
 Electronic banking – Electronic Funds Transfer (ETF)
 Storage of valuables – Storage of Valuables
 Investment advice – Financial Guidance
 Management of trusts – Money Management
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TYPES OF CHECKING
ACCOUNTS
 Regular checking accounts – lots of checks
 Interest-earning checking accounts- Avg. use
 Special checking accounts
 rare use of checks.
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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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ELECTRONIC BANKING
 E-banking services
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Automatic teller machines (ATM)
Payments at the point-of-sale
Direct deposit - Paychecks
Automatic bill payments
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Electronic Banking - Online Bill Pay
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ELECTRONIC PAYMENT
OPTIONS
 Debit card transactions – deducted right from Checking
 Online payments – Pay Pal, Bill Pay, Online Shopping
 Stored-value cards – Lunch, Laundry, and Transit cards
 Smart cards
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BANKING IN THE FUTURE
 Financial services combined with
wireless technology
 Personalized systems for obtaining,
transferring, and using funds
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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.
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Key Terms
 endorsement
 check register
 stop payment order
 bank statement
 bank reconciliation
 outstanding checks
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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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THE FIRST DEPOSIT
 Signature card
 Joint account
 Deposit slip
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SIGNATURE CARD
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TYPES OF
ENDORSEMENTS
 Blank endorsement (Traditional)
 Full endorsement (Special)
 Restrictive endorsement (Specific)
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SAMPLE ENDORSEMENTS
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Endorsement Practice
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USING A
CHECKING ACCOUNT
 Check-writing procedures
 Elements of a check – Drawer, Payee,
Drawee.
 The check register
 Writing a check
 Proper check writing
 Stopping payment
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PARTS OF A CHECK
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Check Writing Practice
Time to fill out your own check. Using the practice
check, properly fill out the check you have been
given to pay a Des Moines Roosevelt Participation
fee.
Drawer – Yourself
Payee – Des Moines Roosevelt
Amount - $190.38
Purpose - Student Fees
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THE RECONCILIATION
PROCESS
 Bank statement information
 Determine checks paid
 Find differences
 Calculate adjusted balance
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MONTHLY ACCOUNT STATEMENT
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RECONCILIATION FORM
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OTHER TYPES
OF PAYMENTS
 Certified checks
 Cashier’s checks
 Traveler’s checks
 Money orders
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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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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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TRAVELER’S CHECKS
 Special forms designed for making
payments when away from home
 Require your signature twice
 First Purchased
 Then, when you cash a check or pay for a
purchase
 Commonly accepted throughout the
world
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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 – by the bank
 A postal money order – by the P.O.
 An express money order - by various agencies
 A telegraphic money order
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