Banking systems, 2nd edition complete searchable part1

Username: in laws . ~ - ~ SOUTH-WESTERN t _ CENGAGE Learning- Banking Systems, 2nd Edition Center for Financial Training Vice President of Editorial, Business: jack W. Calhoun Vice President/Editor-in-Chief: Karen Schmohe Vice President/Marketing: Bill Hendee Executive Editor: Eve Lewis Senior Developmental Editor. Enid Nagel Editorial Assistant Virginia Wilson Consulting Editor. Marce Epstein Assistant Marketing Manager: Linda Kuper Content Project Management Pre-Press PMG Technology Project Manager. Mike jackson Senior Manufacturing Buyer. Kevin Kluck Production Service: Pre-Press PMG Senior Art Director: Tippy Mcintosh Cover and Internal Design: Kim Torbeck, Imbue Design Cover Image: Corbis Photography Manager. Amanda Groszko Printed in the United States of America 1 2 3 4 5 6 7 8 9 12 11 10 09 e 2010, 2005 South-Western, Cengage Learning ALL Rl G HTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or infonmation storage and retrieval systems, except as penmitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written perm iss ion of the publisher. For product information and technology assistance, contact us at Cengage Learnln1 Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at cenpge.com/permlsslons Further permissions questions can be emalled to pennissionrequestocenpge.com Exam View® is a registered trademark of elnstruction Corp. Windows is a registered trademark of the Microsoft Corporation used herein under license. Macintosh and Power Macintosh are registered trademarks of Apple Computer, Inc. used herein under license. © 2010 Cengage Learning. All Rights Reserved. Library of Congress Control Number. 2009922200 Student Edition ISBN 13: 978-0-538-44928-1 Student Edition ISBN 10: 0-538-44928-4 Instructor's Edition ISBN 13: 978-0-538-44930-4 Instructor's Edition ISBN 10: 0-538-44930-6 South-Western Cengage Learning 5191 Natorp Boulevard Mason, OH 45040 USA Cengage Learning products are represented in Canada by Nelson Education, Ltd. For your course and learning solutions, visit school.cengage.com Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Username: in laws . Banking Consultants Christine Bumgardner President & CEO Center for Financial Training Western States Denver, Colorado Loyd Hoskins Educational Consultant Loyd Hoskins and Associates Lakewood, Colorado Marta W. Liimatainen VP, Distance Learning Center for Financial Training Atlantic & Central States Chesterfield, Massachusetts Michael Meakem President Center for Financial Training Atlantic & Central States Norwich, Connecticut Rita Maria A. St. John VP/Banking Information Center Manager Home State Bank Loveland, Colorado Educational Consultants Joseph J. Bachan Business Teacher Portage High School Portage, Indiana Debra L. Beckwith Media & Technology Instructor Bonney Lake High School Bonney Lake, Washington Norma Brown Marketing Instructor Dutch Fork High School Irmo, South Carolina Melissa Faucett Marketing and Finance Instructor Carthage Technical Center Carthage, Missouri Carolyn S. Hunter Teacher Arkadelphia High School Arkadelphia, Arkansas DeeDee Sebrin Executive Director Center for Financial Training South Central States Hot Springs, Arkansas Daniel R. Sierchio coo Danson, Inc. Consultant, Online Instruction Center for Financial Training Atlantic & Central States East Hanover, New Jersey Eric D. Walser Manager, Internal Audit MDC Holdings, Inc. Denver, CO Dan Wojcik President B & F Advisors Little Rock, Arkansas Kathleen Lowry Accounting and Financial Serv. Instructor Gordon Cooper Technology Center Shawnee, Oklahoma Shelley G. Lynch Business and Technology Teacher Reading Memorial High School Reading, Massachusetts Gladys Montgomery Business Department Chairperson Charles H. Flowers High School Springdale, Maryland Mitzi Plunkett Teacher, Cypress High School Weston, Florida Kenneth Reed Business Teacher, Blackman High School Murfreesboro, Tennessee Cassaundra Thrasher Teacher, Upson Lee High School Thomaston, Georgia Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Ill Username: in laws . INSIDE THE STUDENT EDITION CLIMBING THE LADDER explores careers in banking. GOALS outline the main objectives of the lesson. TERMS lists the new terms defined in the lesson. While his children slept on the flight bringing them home from a hectic week at a Florida amusement park. Rez.a reflected on his career. After college, he had accepted a position at a diversified fnancial institution. Werking as a web marketing consulb:nt. for the annuity and mutual funds division, he wu responsible for developing and executirw online marketing initiatives. Reza supported multiple products that were advertised on a variety of websites. He developed web content and designed site layouts. Ensuring that the written and visual elements ccmplemented each other and functioned smoothly were a critical part of this position. Rem had realized that job security could be improved by having a broad base of experiences developed by workirw in a variety of areas. An expanded per- sonal network was another advantage of multiple positions. Next Reza had accepted a job as an implementation technical consultant in the credit card division. Reza was responsible for assessing data technology needs. file specifications, and delivery methods. He streamlined processes and met with internal custDmers to det:ennine electronic reporting formats for products. Realizing that he wanted tD ma.oe higher in the organization, Reza I"'Utinely reviewed internal job postings for supervisory positions. He had been delighted tD pass the rigorous interview process for a job as a business technology supervisor in his company's trust division. In this role, Reza was responsible for application systems analysis and programming activities. After leading teams tD conduct feuibility sbJdies and time and cost estimates, Reza assigned membei"S of his group tD complete various components of the projects. Rem's stellar reputation as an effective supervisor had led tD a job offer as a network security manager. His team wu responsible for developing systems and pmcedures that protected host and network systems from unauthorized access. He managed the aeation of firewall security standards and intrusion detection pmcedures. The team perpetually evaluated the information tech- nology 01) infrastructure tD identify new areu of risk. After the birth of his twins, Reza had decided tD scale back on his houi"S at the office. By working in his wrrent position as an online V'l.ining documen- 13t.ion manager, Reza was able tD work from home three days a week. The flexibility in his schedule helped him and his wife manage childcare needs. In this position, Reza is responsible for overseeing the content development of online V'l.ining coarses, updating existing online courses, and writing and maintaining operational procedures. Upper Rungs to Consider Now that hit children were older, Reza mz/UreJ it UHJI time to find a challenging omite potition. Manage- mentposititmsthat&za [>l<mnd"' lbokfo' indudeJ tedmology integration, IT project management. and rzetworkopemions. Preparing for the Climb Overthecourseofa long ca- reer, an: there ways to occa- tionaUy scale brick to handle tempo"""y demanding 6ft ~tk? What it the best way tottayint!Oltledinyour.field toma.{eitea.rytoreenterthe folJ? 9.4 The 2008 Financial Crisis "' + ldentlfytharaatCIIIISeiSof thelOOBfinancialcrisis. + Dlscussself.~and _ +.;, ; + risk:Mne + rlsk.prefii!IIIV + creditdefaultM"ap(COS) + speculation + syndl!lllcflnanclalprodLICI: Banking Scene Glorl•-""""''~"""''"", ru'""'"~"""-'"""" I some metra money she'd lib to invest. Altho"'lh tnditional investmena, like eos, 111'11 cDII'Ii:!rtlrc to consider beaus~~ d tna la.t~ risK lind pranteeo:~ Interest rate, she'd prefer to make roon= money later. Gloria's heard about ageat ._, tomllkllmoneywldlcredltdelaultll\Wf>S.AithDIJihdlefSDUndlucratlve,she't.a I : .:ncernad llboutthe Lrocert:aln!¥11SSDCII:tedwldlthem. wt.tfactonr.shldd c iderbelbn=rr.kqthisirwestmllllt? THE PllOFIT MOTIVE Most people are interested in making money. Some people rdy on tra- ditional ways to produce income, which include working for a corpora- tion, directly selling productll or ~~ervict~~ to individu.als or companies, or through making investments. If someone is risk averse, he or she would Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. BANKING SCENE provides a motivating introduction to the lesson. Username: in laws . SPECIAL fEATURES ENHANCE LEARNING flat world The International Impact of the Mortgage Crisis Just as a stone t:tlrown in a pond makes a ripple effect throughout t:tle water; the There was a tightening of European lending and a rise in European interest rates as a result of these losses. Countries that exported products to the U.S. received fewer orders because U.S. consumers had less money available to spend on nonessential items. FLAT WORLD provides international banking connections relevant to today's current events. U.S. mortgage crisis has sent shockwaves through financial systems across the globe. In April 2008. the International Monetary Fund OMF) esti- mated that the U.S. subprime mortgage crisis could cause global losses of about $1 trillion. The euro zone is the second largest economy in the world. Think Critically lnvestigat» current ramifications of the mortgage crisis online. In this age of global financial interdependence, what steps can individual economies take to shield themselves from financial exposure due to investments in other countries? In June 2008. the euro zone experienced an infla- tion rate of -4 percent. The central bank of the euro zone had targeted inflation to be about 2 percent. By July 2008. European banks with investments in securities backed by US. mortgages suffered losses. TECH TALK provides information about new technology that is being used in banking. tech talk Ethics in Action Fannie Mae DU and Freddie Mac LP As underwriting of mortgage loans becomes increasingly automated, government- chartered agencies that work with private lenders have developed tools for their lending clients. Fannie Mae's Desktop Underwriter (DU) and Freddie Mac's Loan Prospector (LP) are two automated systems that are helping streamline the underwriting communications between agencies and the client lenders. The desktop programs are based on statistical models of A-lA underwriting data to create an automated scoring system specifically designed with A-lA criteria in mind. As a result, dlese customized automated underwriting systems streamline the often cumbersome process of working through the agencies and the FHA. The systems are FHA approved and can return a routine underwriting decision and conditions within an hour. Lenders enter data from their own sites, using a standard Residential Loan Application. Although they are not the only W2fS to get A-lA approval for Fannie Mae and Freddie Mac funds, these two software programs are the Wfllle of an intercon- nected future in underwriting. Think Critically What type of information had to be factored into the DU and LP programs in order for them to be reliablel What are some elements of the underwriting process that make it difficult to automatel According to reports throughout the media, Senator Chris Dodd, Chairman of the Senate Banking Committee in 2008, received inter- est rate reductions on two of his mortgages held by Countrywide. One rate reduction resulted in an annual interest savings of$2000. The other rate reduction resulted in a $17,000 reduction over the life of the loan. In June 2008, Senator Dodd indicated he had solicited multiple rate quotes from lenders and was unaware of any special treatment. ETHICS IN ACTION provides a real-world situation where students decide an ethical action. Think Critically What extra precautions are required of a politician during financial transactions? What probing questions would be wise to ask to avoid the appearance of favoritism? Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Username: in laws . branchin out Alsllng Banks have had branches in nontraditional loca- tions, like grocery stores, for well over a decade. In addition to providing convenience to customers, these branches need to work to stay prominent in customers' minds. A variety of creative marketing approaches have been used by personnel at nontraditional branches. At one Ohio bank, tellers take to the supermarket aisles to interact with cus- tomers. By telling customers that they can receive $100,000 if they can identify the name of the bank located in the store, customers are prompted to recall the bank"s name. If they correctly identify the name of the bank. the teller then gives them a $100,000 candy bar. Undoubtedly, receiving the candy sweetens their experience! Think Critically How would you react W your grocery shopping experience included an indi- vidualized marketing effort by a bank? Do you think this is an effective w;q to engage customers? skills that pa~ Understanding Consumer Motives People have a variety of reasons for buying products and services. Some of these reasons are based on thoughts and some are based on feelings. Banking is a basic need in modem society. Intellectually, most people understand that they need a bank to deposit a paycheck. to hold their funds, to provide various checking and savings accounts, and to provide ATM services. How a bank is chosen depends on the personality and values of the customer. An analytical customer ma:y do a lot of research to compare products, service levels, and costs among competing banks. If an analytical customer values cost effectiveness and efficiency, they ma:y select the bank that provides the best combination of both. This analytical customer takes a. detached, objective approach to decision making. Some customers take a. more emotional approach when choosing a. bank. A customer who either lived through the depression or who is worried a.bout the lasting impact of the 2008 credit crisis rna.y place a. high premium on the security of their funds. This customer ma:y gravitate to a. bank with personnel that convey a. strong sense of financial knowledge and financial responsibility. During banking transactions, this customer ma.y often seek reassurance that their funds a.re safe. A customer with a. strong need either to feel like pa.rt of a. community or to do business with people they know socially rna.y place a. higher premium on banking where one can develop strong personal relationships. This customer ma:y not thoroughly comparison shop a.nd ma:y select, instead, to choose a. bank where they feel they can trust the people they know. When interacting with customers regarding product or service selection, a.sk them to rank what is most important to them in their selection pro- cess. Their answers will reveal whether they a.re more a.na.lytica.l, emotional, or a. combination of both. Using their responses to frame your discussion, emphasize the qualities of your products or services that a.re most impor- tant to them. For example, efficiency- and va.lue-driven customers might be influenced to buy from you if they hea.r about a.ll of the free online services offered by your ba.nk. Socially oriented customers might like to hea.r about outings to pro baseball ga.mes sponsored by your bank. Customers make post-purchase eva.luations. Followup with customers after a. purchase to see if there's anything you ca.n do to improve their satisfaction. Develop Your Skill In small groups, assign the role of an analytical custotnn" and a social cus~r to group members. Amgn the role of a baol( representative, focus- ing on specific baol(products, lilf! a checl{jng account or a CD, to other group members. The bani( representatives should try to sell each type of cuswmer th.W product by first askjng the custotnn" to list their decision priorities and then by framing the discussion around those priorities. Re- flect on how the approaches and conversations are differ- ent based on the personalily type of the customer. Be pre- pared to share your findings with thee/ass. BRANCHING OUT presents interesting and unique ways bank and companies provide banking services. SKILLS THAT PAY DIVIDENDS presents skills that are necessary for success in the banking industry. Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Username: in laws . SPECIAL fEATURES ENHANCE LEARNING NET BOOKMARK incorporates Internet activities into every chapter. All across America, families are being touched by the mortgage crisis. Access www.cengage.com/schooV pfinance/banking and dick on the link for Chapter 8. The Hope Now Alliance is an alliance of mortgage- related industries and service providers that is focused on keeping homeowners in their homes. The Treasury Department and HUD supported the formation of this alliance to help stabilize the mortgage market. Use the site to learn more about FHASecure and Project Lifeline. How can these programs help trou- bled homeowners! www.cengage.com/school/pfinance/banking Banking Math Connection Private mortgage insurance (PMI) rates may vary, but a typical PMI rate is Y.! of 1 percent of tbe borrowed principal. The formula for calculating tbe monthly PMI cost is Rate X Principal + 12 = PMI Calculate tbe monthly PMI cost for a principal balance of$140,000. Solution IfPMI were required for a principal of$140,000, tbe calculation would be Rate X Principal + 12 = PMI 0.005 X $140,000 + 12 = $58.34 BANKING MATH CONNECTION provides worked examples that reinforce and review math concepts. interesting facts INTERESTING FACTS " communicate " NeighborWorks America was founded by Congress during the 1970s to support community-based revitalization. Their Home Ownership Centers provide mortgage assistance to underserved buyers. D provides an interesting fact about the topic. COMMUNICATE provides activities to reinforce, review, and practice communication skills Interview someone who experi- enced either the Great Depres- sion firsthand or a recent FDIC takeover of a financial institu- tion. Find out ways that people coped with the economic crisis. Write a short report on what you learn and what your inter- viewee thinks should be learned from bankfoilures. Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Username: in laws . ONGOING AssESSMENT Lirt five loan products that were developed to support /oasened loan qualification standards. CHECKPOINT Short questions within lesson to assist with reading and to assure students are grasping concepts. assessment 8.5 ThlnkCritk.ally 1. Wh.atmotivatedlo:ndentoahiftfromfundingmortgageloanofrom loc.olly held depooihl tofundingmortgageo with Wall Stn:d:fin.ancing~ THINK CRITICALLY Provides opportunities to apply concepts. 2. Suong relationships within a a:mmunity help bankers incrcaiiC their customa N.c. How would ongoing,pcnonal rclationahip•with r:u.tomen impact a bank'• dc:cioion n:gardingqu.olifyingcuotomeufN appropriatc:!Oil!lo1 MAKE ACADEMIC CONNECTIONS Provides connections to other disciplines. 3. Review the. description of aAAA bond rating online:. What do you think isanappropriatt:ratingforaaubprimc.mortgagc-backediCCilrity1 4. LookforSIVA,SISA,NINA,orNollli:Mle,No.Auet, No Employ~ mcntloanaonlinc. Me. they atillav.ailablc1 List reasons explaining their currcntlc.vclofavailability. CHAPTER ASSESSMENT Contains Chapter Summary, Vocabulary Builder, Review Concepts, Apply What You Learned, and Make Connections a.IKIJustablei'IWI _ b. balbonmortpae c. buy-down ,.,.,_ d.l!lla'IIW e. Fannii=Mae f.t'bcedi'IWI ,.,.,_ ~obreclosure h. FredilaMK L G~nii=Mae J.ban-ro-wiUII ~1V) l.rr.ortpF-bM:kDd -~ oroW~nadon n.nepdWiequlty • "TI HOM q.recllnlrc r.shared .,, ,_ _(SAM) chapter 8 assessment Chaptu Summary 1.1 MDrtppLendln1 A.AmortgagcisanotciiCGUlcdbyrcalpropcny. B. Mongagc lcndcra provide mmy typca of~ products for buying ahotru:. L2 Mortpp n PnN:Hiinl A. Monthly mongagc payments to lenders usually consiat of pl"incipal, intcrcst,tDc:s,andinsw:aDCC.(PITI). B. SU: ltc:£1" in themMtgageapproval pnr.ess arca pplir o.tion,dOClllnell- lll.tiott, underwriting, dmwingdocumenb, closing, and rc:rouling. LlMo~andthal aw A. Conmmer pt"otc:ction legWationapplieo tomortgage!M<Iingu wdl uotherloano. B. Lcndcn must comply with numcmua housing-11pccific laws. 1.4GaNrn nt-a.c:IIBdi AaM A. The government '-:h 111M<: i<lllDI by guaranteeing to repo.ythe k:nderiftheborrowerddaull:l. B. Mongage progr:ams like: FHA loa111, VA!o=a, and othcnmakcloana pou:iblc to people who might 1101: othcnviac qualify. L.5 "11111 MorlpF Crlllo A. HisiDric.ally, mortgages wuc a IIOUnd,tafc inveatmc:nt bccauac they providcdarcliable,stc:adyinoomc:SUC:ml . B. The mortgage crisis wa1 c.auoed by • combiiUI.tion of factor & including ani~ demand. EN m.wtgage-backW. oc:curitieo,lo rW.lcnd~ ing aiteria, and bond ratings that were issuW. without due diligcn= Vocabulary Builder Chomethctennthatbeltfil:ltheddinition.Writ:ethektk.roftheanswer in the apo :e providorl Some tenn o may not be uac:d. _ I. V.alueoflomoomparcdtovalueofauct _ 2. Prcpayingpanoftheintc:lelttogetalowc:rmonga.gera.tc _ 3. Whcnbanksrc:fusc:tolcndincc:n.ainncighbo.:hoods _ 4. Mortgagewithc.hangingintcrotmtc _ 5.Anotcoc:cur.:dbyreaipropd"ty _ 6.Av.aluec:qualtolpercentofloanprincipel _ 'J. Amortgageinwhir.htheentirercmaininghalan.:eoftheloanis ducinonclingkpaymc:nt _ 8. Principal,intcr"CSt,uus,andinsw:ancc _ 9. Conventional mortgage 10. When the ammmtowW. ott • homcio more than th"=rrent v.alu" of the hom" Make Academic Connections 5. COMMUNICATlON Thc.Hummc:Socicty,rc:cognizingth.atthemort~ gagc:criaiaisprcventingpcopl"-frtxnk.:epingthcirptts,h.asinstitutcd a grant pt"ogtam tohdp agencio. reach out to P"-1: owna o with idc:ufN kuping thc:ir pru Th""" P"-1:1 are suffering dowmlream dfo:l:l of the mortgage r:riois. What other part:o ofoocicty,Cthu livingentitio .w husi~ nasa, arc being affw:cd by th" aisis1 Prepare a chan dcoa:ibing the afttacdentitieoandhowtheyau:afttacd Slw:"thech.anwith theclau. 6. THI RIGHT DICIIION During July2008, theC~itmJpltJj,.fktlkr featur.:dtht=l<Xllllendinginstitution o thatwercinoolidfinanc:i.olcon~ clition <kopitc the mortgage lending crisio. They ohaud • common trait ofmaintainingcolllctVativ"lc:ndingSWldardo.Thc:=csofthcsc:banko arc V.allcy Savinga, FintFaicr.al ofl.ahwood,and Third Faicr.al Sav- ings.R.coc:archthCI"-iwlkoonlinc:totcehowth"yarcdoingtod.ay.How doyouthinkthc:irronacrv ativ"appt" ch"-"affc:ctcdthcirlottgcvity1 Review Concepts 11. Whatisamortgage? 12. What is a foreclosure? Apply What You Learned 25. Under traditional circumstances, why does obtaining a mortgage initiate the most thorough credit review most consumers will ever undergo? 26. What factors does a lender judge in order to assess consumer capability? Make Academic Connections 29. BANKING MATH Calculate the PMI (private mortgage insurance) for a principal balance ofS125~00. Assume the PMI rate is Y.! of 1 percent of the borrowed principal . 30. TECHNOLOGY Use the Internet to learn more about the impact of technology on the real estate and mortgage industries. Prepare an oral report on what you learn. Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Username: in laws . The Business of Banking 1.1 Introduction to Banking 1.2 Role of Banks in the Economy 1.3 How the Banking System Works 1.4 Other Financial Institutions _,I :z Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Username: in laws . 1/l c ~ climbing the ladder I From Human Resource Assistant to Human Resource Specialist Leya, a banking human resources specialist, finished giving a brief welcom- ing speech to a group of administrative assistants recently hired. Their eager faces and attentive manner prompted her to reflect fondly on the beginning of her career. Leya began her banking career as a human resources administrative assistant. This entry level position provided Leya the opportunity to demonstrate her project management skills. By effectively processing job applications, co-coordinating new employee orientation, administrating employee training schedules, and handling travel schedules and expense reports for managers, she had proven herself as a reliable employee. Leya's experience with new employees helped her earn an entry level corporate recruiter position. Conducting reference checks, overseeing background investigations, and arranging pre-employment drug screening were among her routine duties. Leya also enjoyed publicizing job postings, fol- lowing up on employee referrals, representing her bank at career fairs, and traveling to colleges for campus recruitment. As Leya had a knack for recognizing talent and sending viable candidates for- ward for additional interviews, she was tapped for a position as a corporate recruiter. To ensure she carried out her duties effectively, and in compliance with the law, Leya obtained training in employment law as well as wage and hour regulations. She also received training regarding how to avoid discrimi- nation in the hiring process. Her duties as a corporate recruiter varied. She updated and maintained her bank's Open Requisition Report that contained job postings for all open positions. Leya managed the bank's New Hire Orientation Program. She also participated in final hiring interviews for management level employees. Developing employment agreements was another part of her job. As a corporate recruiter, Leya conducted exit interviews for employees. She developed a continuous improvement program which incorporated comments of exiting employees to develop strategies for reducing turnover. With the breadth of her prior experience to support her, Leya applied for and obtained her current position as a human resources specialist. Leya enjoyed her current duties, which included staying current on banking salary trends to ensure her company offered competitive salaries, developing best practices for employee career development, and facilitating smooth transi- tions of employees from acquired banks into her bank's organization. Upper Rungs to Consider Leya found her current position challenging and gratifying. In order to prepareforfuturejob opportunities, she planned to investigate the job re- sponsibilities for a human resources manager and for a corporate training manager. Preparing for the Climb Career manuals often sug- gest taking on pieces of jobs that you would like to have while you are still in your current role. Are there responsibilities or projects you could askfor, in your current job, that would give you experience in a job you would like to have? ~ ~ Chapter I The Business of Banking Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. ] Username: in laws . I . I goals + Define the business of banking. + Identify trends in modem banking. terms + medium of exchange + financial intermediary + commercial bank + retail bank + central banks Introduction to Banking Banking Scene Edo"'"' Ramlre> ""takeo hi• fim 1"11-tlme job worldog" • '"mme' IH'eguml I at a local pool. After receiving his first paycheck, Edouard has decisions to make about how to handle that money. Along with choices about budgeting and spend- ing, Edouard must decide what to do with his check, such as how to cash it, where to put his money, how to gain access to it, how to use it effectively, and how to take advantage of the range of services available to modern consumers. Writing checks, using ATMs, learning about debit and credit cards, and investigat- ing forms of saving and investment are all things Edouard wants to consider. How can he get this information? WHAT Is A BANK? • • • • • • • • • • • • • • • • • • • • • • • • • • When you think of a bank, what image comes to mind? Do you see a nearby building where people deposit their paychecks? Maybe you visualize the automated teller machine (ATM) where people use a card to get cash fast, or you recall the bank statements that many people still get in the mail. Perhaps you see a tall tower with a logo or a name you recognize. If you're technologically savvy, you may imagine someone going over personal finances while on the Internet. Maybe you think of managing all of your accounts from the convenience of your home computer or laptop. Perform- ing account management functions from your cell phone is another option. However you think of banks, and they include all these ideas and more, don't lose track of one basic idea. A bank is a business. Banks sell their ser- vices to earn money, and they market and manage those services in a com- petitive field. In many ways, banks are like other businesses that must earn a profit to survive. Understanding this fundamental idea helps explain how banks work, and helps you understand many modern trends in banking and finance. A Unique Business Banks, of course, don't manufacture cell phones or repair automobiles. The services banks offer to customers have to do almost entirely with handling money for other people. Money is a medium of exchange, an agreed-upon 4 Chapter I The Business of Banking ______ Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. [...]... onto an employee's smart card Employees can then access their pay even if they do not have a bank account • Online banking takes advantage of growing Internet use Whether called Internet banking, electronic banking, home banking, or PC banking, online banking allows customers to perform banking transactions from their home computers Everything from balance inquiries to bill paying to applying for a... copied, scanned, or duplicated, in whole or in part Introduction to Banking 9 Username: in laws 1.2 Role of Banks in the Econotny goals + List banking activities that contribute to economic stability + Explain how banking expands the economy Banking Scene As Edo••n1 Ram; , th;"" "'o"' how to ""' h;, pay . Username: in laws . ~ - ~ SOUTH-WESTERN t _ CENGAGE Learning- Banking Systems, 2nd Edition Center for Financial Training Vice President of Editorial, Business:. 2009922200 Student Edition ISBN 13: 978-0-538-44928-1 Student Edition ISBN 10: 0-538-44928-4 Instructor's Edition ISBN 13: 978-0-538-44930-4 Instructor's Edition ISBN 10:. of banking. + Identify trends in modem banking. terms + medium of exchange + financial intermediary + commercial bank + retail bank + central banks Introduction to Banking Banking