the business of banking n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
THE BUSINESS OF BANKING PowerPoint Presentation
Download Presentation
THE BUSINESS OF BANKING

Loading in 2 Seconds...

play fullscreen
1 / 33

THE BUSINESS OF BANKING - PowerPoint PPT Presentation


  • 379 Views
  • Uploaded on

THE BUSINESS OF BANKING. 1. 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. Lesson 1.1 INTRODUCTION TO BANKING. GOALS. Define the business of banking Identify trends in modern banking. WHAT IS A BANK?.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'THE BUSINESS OF BANKING' - wynona


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the business of banking

THE BUSINESSOF BANKING

1

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

lesson 1 1 introduction to banking

Lesson 1.1INTRODUCTIONTO BANKING

GOALS

Define the business of banking

Identify trends in modern banking

what is a bank
WHAT IS A BANK?
  • A bank is a business.
  • Banks sell their services to earn money.
  • Banks must earn a profit to survive.
a unique business
A UNIQUE BUSINESS
  • 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 system for measuring values of goods and services.
    • Money shows how much something is worth.
  • A bank is a financial intermediary for the safeguarding, transferring, exchanging, or lending of money.
types of banks
TYPES OF BANKS
  • Commercial banks
  • Retail banks
  • Central banks
banking today
BANKING TODAY
  • Traditionally, banking was viewed as a solid and slow-moving industry.
  • Banking today is an exciting, fast-moving, around-the-clock, around-the-world activity.
mergers
MERGERS
  • A merger occurs when one or more banks join or acquire another bank or banks.
  • Mergers increase the size of banks, giving them more resources.
  • Mergers decrease the number of banks.
  • Mergers have created an opening for a new wave of small local banks.
top ten largest banks worldwide ranked by size of assets
TOP TEN LARGEST BANKS WORLDWIDE (Ranked by size of assets)

Bank Country

Citigroup United States

Mizuho Financial Group Japan

UBS Switzerland

Sumitomo Mitsui Fin. Grp. Japan

Deutsche Bank Group Germany

Mitsubishi Tokyo Fin. Grp. Japan

HSBC Group United Kingdom

JP Morgan Chase & Co. United States

BNP Paribas France

Bayer HypoVereinsbank Germany

technology
TECHNOLOGY
  • Impact on bankers
    • Accounting, auditing, and examining functions have been taken over by fast and efficient technology.
    • Funds transfer, record keeping, and financial analyses have become instantaneous.
  • Impact on consumers
    • Automated teller machines (ATMs)
    • “Smart” cards
    • Online banking
competition
COMPETITION
  • As government regulations have changed, competition between banks has become fiercer.
  • Banks compete with each other and with other businesses that sell financial services.
lesson 1 2 role of banks in the economy

Lesson 1.2ROLE OF BANKS IN THE ECONOMY

GOALS

List banking activities that contribute to economic stability

Explain how banking expands the economy

banks and economics
BANKS AND ECONOMICS
  • Money is a medium of exchange and the basis of the modern economy.
  • Banks and other institutions play a critical role in performing services that are essential to the functioning of an economy.
keeping your money safe
KEEPING YOUR MONEY SAFE
  • Record keeping
  • Identification
  • Enforcement
  • Transfer security
  • Sound business practices
spreading the wealth
SPREADING THE WEALTH
  • Banks play a key role in transferring money to provide growth and stabilizing the monetary supply.
  • Bank lending makes money available to consumers and businesses to make purchases they might not otherwise be able to make.
transferring
TRANSFERRING
  • Between banks
  • Between banks and individual customers
  • Between banks and industry
  • Between banks and governments
  • Between governments
lending
LENDING
  • Loans to businesses
  • Loans to governments
  • Loans to individuals
    • Credit cards
    • Home loans
    • Automobile loans
creditworthiness
CREDITWORTHINESS
  • Evaluating the creditworthiness of customers is a banking function that affects the economy at large.
  • Banking policies and regulations regarding creditworthiness and the ratio of loans to deposits help guarantee a secure financial environment.
guaranteeing the money
GUARANTEEING THE MONEY
  • In the United States, banks and the government work together to form the banking system and to make sure the money supply is adequate, appropriate, and trustworthy.
  • Much of this guarantee is backed through the central banking function of the Federal Reserve.
  • Individual banks work with the government to implement monetary policy, perform exchange functions, and defeat counterfeiters of currency.
  • Banks guarantee their own policies.
the substance of society
THE SUBSTANCE OF SOCIETY
  • A great part of the economic system is psychological.
  • Banks are at the heart of our financial system, and their effect on your life cannot be calculated.
lesson 1 3 how the banking system works

Lesson 1.3HOW THE BANKING SYSTEM WORKS

GOALS

Explain how banks acquire money to do business

Identify new services that banks offer to stay competitive

money at work
MONEY AT WORK
  • Banks earn money in various ways.
  • Most of their income comes from the interest that people or businesses pay as they repay a loan.
  • When banks lend money, they put it to work.
the spread
THE SPREAD
  • The difference between what a bank pays in interest and what it receives in interest is called the spread, or net interest income.
  • The spread is not pure profit. The spread is income, or revenue.
  • Profit (or net income) is what is left of revenue after expenses are deducted.
other funds
OTHER FUNDS
  • In addition to interest income, banks have other sources of income.
  • They charge for various services such as rental of safe-deposit boxes, account maintenance fees for checking accounts, fees for online bill payments, and ATM transaction fees.
  • Banks make money on investments.
  • Banks may have funds at their disposal from stockholder investments.
assets and liabilities
ASSETS AND LIABILITIES
  • An asset is anything of value. In financial terms, that usually means money.
  • A liquid asset is anything that can readily be exchanged, like cash.
  • A liability, in financial terms, is a cash obligation.
two principles of banking
TWO PRINCIPLES OF BANKING
  • A bank’s liabilities exceed its reserves.
  • A bank’s liabilities are more liquid than its assets.
test of bank profitability
TEST OF BANK PROFITABILITY
  • Return on assets (ROA)

Net income  Total assets  Return on assets

  • Return on equity (ROE)

Net income  Total equity  Return on equity

banks working for you
BANKS WORKING FOR YOU
  • Banking has changed radically in the last 20 years.
  • Large regional banks have huge resources.
  • Smaller banks use the flexibility that sometimes comes with smaller size to their advantage.
changes in traditional services
CHANGES IN TRADITIONAL SERVICES
  • Branch locations
  • Extended hours
  • Drive-up windows
  • Variety of checking accounts
  • Savings options
  • Personal service
new services
NEW SERVICES
  • Credit cards
  • Innovative lending
  • Automated teller machines (ATMs)
  • Smart cards
  • Online banking
lesson 1 4 other financial institutions

Lesson 1.4OTHER FINANCIAL INSTITUTIONS

GOALS

Explain depository financial institutions

Explain nondepository financial institutions

types of financial institutions
TYPES OF FINANCIAL INSTITUTIONS
  • Depository intermediaries
    • Obtain funds from the public
    • Use the funds to finance their business
  • Nondepository intermediaries
    • Do not take or hold deposits
    • Earn their money by selling specific services or policies
depository intermediaries
DEPOSITORY INTERMEDIARIES
  • Commercial banks
  • Savings and loan associations
  • Mutual savings banks
  • Credit unions
nondepository intermediaries
NONDEPOSITORY INTERMEDIARIES
  • Insurance companies
  • Trusts companies/pension funds
  • Brokerage houses
  • Loan companies
  • Currency exchanges