2 CHAPTER ONE An Overview of Banks and the Financial Services Sector In this chapter you will learn about the many roles banks and their financial service competitors play in the economy today. You will examine how and why the banking industry and the financial services marketplace as a whole is rapidly changing, becoming new and different as we move forward into the future.
3 The Different Kinds of Banks Today Commercial BanksSavings BanksCooperative BanksMortgage BanksCommunity BanksMoney Center BanksInvestment BanksMerchant BanksInternational BanksWholesale BanksRetail BanksBankers’ BanksMinority BanksNational BanksState BanksInsured BanksMember BanksAffiliated BanksFringe BanksUniversal Banks
4 The Financial Service Competitors of Banks Savings and Loans AssociationsSavings BanksCredit UnionsMoney Market FundsMutual Funds (Investment Companies)Hedge FundsSecurity Brokers and DealersFinance CompaniesFinancial Holding Companies or ConglomeratesLife and Property-Casualty Insurance Companies
5 Traditional Services Offered By Banks Exchange of CurrencyCommercial Notes and LoansOffering Savings DepositsSafekeeping of ValuablesSupporting Government Activities with CreditChecking AccountsTrust Services
6 Recent Services of Banks Consumer LoansFinancial AdviceCash ManagementEquipment LeasingVenture Capital LoansSelling Insurance ProductsSecurity Underwriting and Brokerage ServicesMutual Funds and AnnuitiesMerchant Banking Services
7 The Roles of Commercial Banks and Their Closest Competitors Intermediation RolePayment RoleGuarantor RoleRisk Management RoleSavings/Investment Advisor RoleSafekeeping/Certification of Value RoleAgency RolePolicy Role
8 Trends Affecting Banks and Other Financial Service Firms Today Service ProliferationRising CompetitionGovernment DeregulationIncreased Interest Rate SensitivityTechnological ChangeConsolidation and Geographic ExpansionE-Banking and E-CommerceConvergenceGlobalizationIncreased Risk of Poor Performance and Failure