banking basics. bellringer—two parts 1. take pretest via . (5 min.) 2. complete a word study on...
TRANSCRIPT
BELLRINGER—TWO PARTS
1.Take Pretest via www.m.g-wlearning.com. (5 min.)
2.Complete a word study on BANK. (10 min.)
Objectives• Describe the purpose of a bank.• Compare and contrast different types of
banks,• Explain the effect technology has had
on modern banking.
What is a Bank? A type of financial institution that provides services
related to money. Deposits, loans, and other services Handle money and make money, Lend money at a higher interest rate than they pay
depositors; Provide safe-deposit boxes; Charge fees of various kinds
Highly regulated Bank’s charter details how to be operated and
regulated Banks are depository institutions—customers can give
make a deposit or make a withdrawal Doesn’t keep 100% of deposits available—keeps
reserves on hand. (held to ensure money is available to customers
What does a bank do? Retail banks: provide services for consumers i.e. deposit
accounts, mortgage, auto, credit cards, and personal loans Internet banks: no physical location or building, no in-person
service Commercial banks: focuses on business customers for foreign
exchange, investment services, capital loans, limited consumer-oriented services i.e. personal checking and savings accounts
Money Center banks: very large, often international, primary customers are businesses, other banks, and governments . Hit hard by global financial crisis in 2007
Investment banks: helped companies prepare to become publicly traded companies to make profit from stock market.
Central banks: lend money when commercial banks are not able to , they regulate banks, and control the money supply
Who Owns the Bank? In U.S.,
corporations or individuals
In some countries, government (nationalization)
Where Do Banks Operate? Unit banks: small
towns or rural areas
Regional or interstate banks: across a state or few
National banks: across the country
Technology’s Transformation of Banking
Automated Teller
Machines (ATM)
Online Banking
Mobile Banking (apps)
Discussion . . . What are the
different ways a consumer can bank today?
Can you think of any ways that banking may have changed throughout the years?
Small Group Activity Create a chart outlining the different
types of banks, the basic aspects of each type, and a major advantage and disadvantage of each type.
Analyze these different types of banks based on the two viewpoints: what the bank does, and where the bank operates.
Objectives Describe the economic functions of
banks. Explain a bank’s safekeeping function. Explain how credit is essential to a
country’s economy. Define the bank’s role as financial
intermediary. Discuss why fast and certain access to
funds are keys to a banking system.
Economic Functions of Banks Safekeeping services that protect our
money Deposit services that let our money
grow Loan services that allow us to borrow
money
Keeping Money Safe Physical and electronic security Keep accurate records (trail of business
activities) Debit card (check card) allows us to
withdraw cash and pay for goods/services
Deposits insured by ____________ (you tell me)
Extending Credit Major lenders in our economy Without them, borrowers suffer Economy relies on banks to provide
loans to keep it growing.
Transferring Funds Electronic funds transfer (EFT): electronic
exchange of money from one account to another through computer-based systems
Example(s): use of debit card or ATM Most funds transfers involve automated
clearinghouses (ACHs)—processing credit and debit transactions and transferring funds from bank to bank
Example(s): Federal Reserve Bank (60% of transactions)
Loan CycleBank uses deposits to make a car
loan to customer
Customer uses loan to buy car from
car dealer
Car dealer pays car salesman
after sale of car
Car salesman buys a new TV with the
money received
TV store deposits
money into bank account
Small group activity . . .Get into groups of two or three and
discuss the term financial intermediary. Have you heard this term
before? Using what you already know about these two individual words, come up with your own definition of this term and how it applies to banks. Prepare to
share your ideas with the class.
Financial Intermediary Institution that acts as a go-between in
financial transactions Play a vital role in our economy Banks use money from savers to make
loans Both saver and borrower receive
services they need
Discussion . . . How do banks
make money? How do offering
credit cards and other loans contribute to this end?
More Discussion . . . While lending money
is necessary to keep the economy flowing, what are some possible negative consequences of lending money?
Discuss this issue in light of the Great Recession of the 21st century—how might poor lending decisions have affected the economy in this situation?