Banking services

Office and administrative support workers
constitute 64 percent of all jobs.
Many job opportunities are expected for office
and administrative support workers, because
these occupations are large and have high
turnover.
Many management positions are filled by
promoting experienced, technically skilled
professional personnel.
Despite recent volatility within the banking
industry, wage and salary employment is
expected to grow 8 percent over the
projection period, compared to 11 percent for
all industries.
Nature of the Industry About this section
Banks safeguard money and provide loans,
credit, and payment services such as checking
accounts, debit cards, and cashier's checks.
Banks also may offer investment and insurance
products. As a variety of models for cooperation
and integration among finance industries have
emerged, some of the traditional distinctions
between banks, insurance companies, and
securities firms have diminished. In spite of these
changes, banks continue to maintain and perform
their primary role —accepting deposits and
lending money.
Goods and services. Banking comprises two
parts: Monetary Authorities—Central Bank, and
Depository Credit Intermediation. The U.S. Federal
Reserve System is the central bank of the United
States and manages the Nation's money supply
and international reserves, holds reserve deposits
of other domestic banks and the central banks of
other countries, and issues the dollars we use.
The credit intermediation and related services
industry provides banking services to consumers
and businesses. It secures the money of
depositors, provides checking and debit card
services, and lends money to consumers and
businesses through credit cards, mortgages, car
loans, investment loans, and lines of credit.
Industry organization. There are three basic
types of banks: commercial banks, savings and
loan associations, and credit unions. Although
some of the differences between these types of
banks have lessened, there are key distinctions.
Commercial banks, which dominate this industry,
offer a full range of services for individuals,
businesses, and governments. Commercial
banks come in a wide range of sizes, from large
global banks to mid-size regional and small
community banks. In addition to typical banking
services, global banks lend internationally and
trade foreign currencies. Regional banks have
numerous branches and automated teller
machine (ATM) locations throughout a multi-state
area and provide banking services to individuals
and local businesses. Community banks are
based locally and have fewer branches than
regional or global banks. In recent years, online
banks—which provide financial services entirely
over the Internet—have entered the market, with
some success. However, even in Internet
banking distinctions have lessened as traditional
banks also offer online banking, and some
formerly Internet-only banks have opened
branches.
Savings banks and savings and loan associations,
sometimes called thrift institutions, are the second
largest group of depository institutions. They
were first established as community-based
institutions to finance mortgages for people to
buy homes and still cater mostly to the savings
and lending needs of consumers. Over time,
distinctions between savings banks and
commercial banks have largely disappeared.
Credit unions are another kind of depository
institution. Credit unions are formed by people
with a common bond, such as those who work
for the same company, belong to the same labor
union, or live in the same county. Only people
who have the common bond are allowed to
become members. Loans and savings accounts
are restricted to members. Credit unions are
nonprofit organizations that are governed by a
board elected by the depositors (members).
Federal Reserve banks are Federal Government
agencies that perform many financial services.
Their chief responsibilities are to regulate the
banking industry and to create and implement the
Nation's monetary policy by controlling the
money supply —the total quantity of dollars in the
country, including cash and bank deposits. The
Federal Reserve uses monetary policy to promote
economic growth while limiting inflation. During
periods of slower economic activity, the Federal
Reserve may increase the money supply by
purchasing government securities and other
assets. The Federal Reserve also promotes
economic growth by lowering the interest rate it
charges banks for loans. Increasing the money
supply and lowering the interest rate charged to
banks that borrow money gives banks more
money to lend and, hopefully, grows the
economy. The Federal Reserve may attempt to
fight inflation by selling its government securities
or raising the interest rate it charges banks, thus
reducing the amount of money banks can lend.
Federal Reserve banks also perform a variety of
services for other banks, including processing
checks that are drawn and paid out by different
banks.
Interest on loans is the principal source of
revenue for most banks, making their various
lending departments critical to their success. The
commercial lending department loans money to
companies; the consumer lending department
handles student loans, credit cards, personal
loans, and car loans; and the mortgage lending
department loans money to individuals and
businesses to purchase real estate.
The money banks lend comes primarily from
consumer and business deposits in checking,
money market, and savings accounts and
certificates of deposit. These deposits often earn
interest for their owners, and provide owners
with payment methods, such as online bill
payments, checks, and wire transfers. Deposits in
many banks are insured and regulated by a US
Government agency, the Federal Deposit
Insurance Corporation (FDIC), which guarantees
that depositors will get their money back, up to a
stated limit, if a bank should fail. Deposits in
savings and loan associations and credit unions
are insured and regulated by other US
government agencies.
Recent developments. Declining home prices
were one cause of the recent financial crisis. As
home values declined, many borrowers stopped
paying (defaulted) on their home loans
(mortgages.) With prices of houses declining and
increasing rates of default, banks suffered large
losses. Some banks suffered larger losses than
other banks because they made riskier mortgage
loans or owned mortgages concentrated in areas
of the country with the largest housing price
declines. Many banks with large losses were
bought by other, stronger banks, or were taken
over by the FDIC.
The financial crisis accelerated an ongoing
fundamental change in the banking industry as
banks diversify their services to become more
competitive. The financial crisis has allowed
stronger banks to buy other banks and
companies that provide other financial services at
lower prices than before the crisis. Some other
financial services that many banks offer their
customers include: financial planning and asset
management services, brokerage services, and
insurance services. Banks purchase companies
that offer these services and still offer them
through a subsidiary or a third party. The
financial crisis also helped commercial banks
increase their share of the investment banking
industry. Investment banks help companies and
governments raise money through the issuance
of stocks and bonds. As banks respond to
regulatory changes and other changes driven by
the financial crisis, the nature of the banking
industry will continue to undergo significant
change.