4-4. Who charters new banks in the United States? New thrift institutions? New banks are chartered by the banking commissions of the individual states or, at the federal level, by the Comptroller of the Currency. Theift institutions are chartered by the states or at the federal level by the Office of Thrift Supervision. 4-6, What are the advantages of having a national bank charter? A state bank charter? ‘The benefits of a national charter are: a.) I brings prestige due to stricter regulations and may help attract more eustomers b.) — Intimes of trouble the technical assistance given may be better ensuring a better chance of long run survival 39 ‘The benefits of a state charter are: 41) Tmay be easier and Iess costly to get a state charter .) ‘The bank does not have to join the Federal Reserve and therefore avoids buying and holding low yield stock ofthe Federal Reserve ¢.) Many states let a bank lend mere to one borrower @}) State chartered banks may be able o make types of loans that a nationally chartered bank cannot 4-7. What kinds of information must the organizers of new national banks provide the Comptroller of the Cumeney in order to get a charter? Why might this requited information be important? ‘The Comptroller of the Currency asks for information on the number of competing banks and. bank-like institutions in the service area of the proposed bank. More competitive market situations limit the profit potential and perhaps the growth potential of anew bank. Also requested is information about shopping centers, retail and wholesale business activity, recent population growth, traffic counts, and personal income levels - all viewed as indicators of potential demand for banking services in the service area of the proposed new bank. Applicants ‘must also provide background information on the organizers and proposed management of a new ‘bank so the Comptroller can decide if these people are qualified, law-abiding, and trustworthy to ‘manage the public's funds as well as their own.4-9, What are the key factors the organizers ofa new financial firm should consider before deciding to seek a charter? While a variety of factors are examined by different business people interested in establishing a new bank, most look st some or all ofthe following factors. 1. External Factors a. Thelevel of local economic activity. b. Growth of local economic act © Thenced fora new bank 4d, The strength and character of local competition in supplying financial services, 36 2. Internal Factors 8. Qualifications and contacts of the new bank's organizers b. Management quality ©. Pledging of capital and funds to cover the cost of filing a charter application and begin operations 4-17, What are POS terminals and where are they usually located? Point-of:sale terminals are set up to accommodate customer purchases of goods and services, These computer terminals normally are located in retail stores, gasoline stations, and similar places with a link to the banks’ own computer records. When a customer of the bank makes a purchase, the amount of the transaction is deducted from the customer's deposit account and. added to the store's account. Because the customer immediately loses funds many bank ‘customers have been hesitant to use the service as opposed to paying by check or credit card ‘where payment is delayed for a few days. However, this depends on whether the POS terminal is an offline or online terminal, An offtine terminal accumulates all transactions until the end of the day when all transactions are subtracted from a customer’s account. This type of terminal is less costly forthe bank to operate. An online terminal subtracts the transactions immediately from the customer’s account and reduces the chance of an overdraft occurring but is more ‘expensive for the bank to operate. Consumer reluctance to use POS terminals appears to be iz and as fees for other services rise this reluctance will continue ta disappear.‘The earliest ATMs provided a convenient mechanism for eashing checks, making deposits, and verifying checking account balances, often at hours when the full-service branch offices were closed. Today, ATMs frequently provide a wide menu of old and new services, including bill paying, transfer of funds between accounts, and the purchase of tickets for travel and entertainment. Most authorities expect ATM usage to grow rapidly as these machines offer more services and as bankers inereasingly move to restrict customer access to more cosily human tellers and other bank personnel, often by charging extra fees for personal se ATMs do have some significant limitations that bankers will have to work to overcome. They break down and need to be replaced, sometimes quite frequently and annoyingly for customers, tnd as technology changes often become quickly outdated. Customer aetivity around ATMs, particularly at night, has invited criminals to steal money and injure customers, sometimes, ‘creating lability for banks. Moreover, not all customers make use of these facilities due to a preference for personalized service, fear of erime, or unfamiliarity with how the machines work. ‘Customer education and better service pricing are two important tools that could help with these problem areas in the future, In addition, ATMs do not rank high in their ability to sell peripheral services. Some banks have found that there has been a sharp deeline in their ability to sell other services. Finally, ATMs are not necessarily profitable for all banks. Because they are available 24 hours, some customers may make more frequent and smaller withdrawals from the machine than they would with a human tele, driving up the costs. In addition, these same customers will ‘ten still demand « human teller to deposit their pay check, making the bank keep both tellers and ATM machines. Whether ATM should carry a fee is rather controversial. Recently. two of the largest ATM networks have decided to let owners of ATMs charge non-customers.a surcharge. Several regional have begun to charge fees aswell. These fees reflect the usage of ATMs, About 85% ‘orall ATM transactions consist of eash withdrawals and only about 10 percent represent incoming deposits. In addition, in many places, ATM usage has declined as customers pass over ATMS in favor of eredit and debit cards, onsite terminals and the internet.‘Concept Checks, 4-1, Why isthe physical presence of a bank still important to many bank customers despite recent advances in long-distance communications technology? oa ' & BRARTe, MURR) ERIE. HERR 8s SiR AMMAR RRA BALIRfS mL iRe Many customers still prefer the personal attention and personal service that contact with bank employees provides. Moreover, for those services where problems can arise that require detailed information and explanation-for example, when a checking account is overdrawn and checks begin to bounce-the eustomer needs quick aecess and, olten, the personal attention to his or her problem on the part of one or more employees.