BANKING SERVICES and PRODUCTS

Objectives:

 familiarize the students with typical types of banking products and services
 getting used and practice with specific vocabulary
 reading comprehension, writing
 speaking practice
I. Answer the questions before reading the text:
1. Why do most of us hand over our hard-earned money to a bank?
2. How difficult might be for people to buy a home, or start a business, or for companies to invest,
without banking services?

READING COMPREHENSION
The economic and social role of banking
Banks hold short-term customers’ deposits but lend long-term loans, turning short maturity deposits into
long maturity credits and they manage the risks associated and collect the difference in the interest rate as
profit. In other words, banks and other financial institutions receive deposits from consumers and then
issue loans to individuals or businesses in need. Unlike stuffing surplus money under a mattress, deposits
normally go into either checking or saving accounts which pay a nominal and often very low interest rate.
Even if the bank used collapses, the money deposited with it is insured. The funds can then be lent to
others as home mortgages, home equity lines of credit, or small business loans.
Most financial institutions however do not limit their business activities to simply taking deposits and
issuing loans. They earn money by charging more interest on loans than they pay on savings. Interest
income is used to cover the costs involved in keeping interest-rate risk under control, to cover losses on
loans that are not repaid or not repaid in full, and to pay the bank's overhead, such as wages. They often
supplement their income by issuing Certificates of deposit as well as money market accounts. Certificates
of deposit work similarly to customer deposits in that the funds are given a slightly better rate of return
but are locked in for a fixed period of time so the bank can use the funds to issue loans. Investment
accounts on the other hand usually incur management fees for maintaining the account as an
administration expense.
Banks and credit unions found out long time ago that they can make even more money not just by
offering products or services and then using the deposits for loans but by also charging their customers
various penalty fees just for the opportunity to use those services. Institutions charge penalties for
overdrawing a checking account also known as bouncing a check. In the 80s and 90s it was common for
checks presented to banks for payment, whether were not enough funds available, to simply be denied and
reported that there are insufficient funds. More recently however they soon realized that it's better to
cover the check and offer a service called a courtesy overdraft or overdraft protection. That way they can
charge a monthly fee for this additional "service" and still benefit if the account stays overdrawn for too
long. Even if this service is not offered, many banks will still allow the check to clear and simply charge
an overdraft fee.
Needless to say there are many different revenue sources that banks use to make money. How banks make
money is only limited by their imagination and consumer backlash against increased fees and penalties.
The best thing consumers can do is shop around and let competition provide the best consumer experience
by getting great deals on loans and keeping fees and penalties to an absolute minimum. (Chris Potter,
Stock Monkey)
http://www.stockmonkeys.com/how-does-a-bank-make-money-RZTPZ357
II. Find the answers in the previous text:
1. What are the main incentives for keeping your money in a bank?
2. What are the challenges that banks must face today?
3. Define the volatile environments that modern banking needs to face.
4. Detail the four-fronts that banks cannot afford to shirk.

VOCABULARY
III. Match the given missing words with their blanks in the following text: branch staff, banking
services, cashiers; customer; cash management; cards, payments, balance
Reshaping the customer experience
Many of the changes banks must make to meet the a) …………. needs will be driven by the growth in
mobile and smartphone use which has already exceeded bank account penetration. The apps that appeared
on mobile devices make customers look forward to be able to check their b) …………. and make
transfers through their phones. Online banking has evolved with some banks even offering c) ……
………. through Facebook. Check and card imaging technologies are expected to become commonplace
and digital printing may eventually enable customers to issue their own d) ………. at home. Increased use
of smartphones, combined with contactless technology, will potentially transform e) …….. ……….. and
enhance biometric security. Some of the greatest investments will be in real-time f) ………….. and in
transmitting funds instantaneously. Although it is expected that self-service machines replace g)
……………. and mobile wallets become commonplace, customers will still rely heavily on personal
branch staff for advice. Even though the roles of h) ………… ……….. in retail banking, as well as
relationship managers in commercial, corporate and private banking, will be transformed, technology will
not replace people, but enhance their capabilities and change the ways customers and staffs interact.
IV. The titles you will find for the following paragraphs outline the financial products and services that
modern banks can provide: cards; investments; loans; merchant services; accounts; on-line banking
http://www.stockmonkeys.com/what-services-do-modern-banks-offer-4BTIGOI3
A) …………..
Everyone is familiar with checking and saving accounts which are used to build pay bills and build
emergency funds but there are other types of accounts as well. Money market accounts can be used to
earn a little more interest than a savings account. Individual Retirement Accounts and Certificates of
Deposit are variations of standard accounts with certain benefits and limitations. College savings accounts
can be used to set aside money for a child's education. Business accounts can help maintain separate
entity status between personal and corporate finances. If you need an account for a specific reason, it's
likely your bank or credit union offers something which will fill the requirement.
B) …………….
Banks make money by taking demand deposits for different types of accounts and then using that money
to extend loans to consumers. This has been a business model in existence for the entirety of every
financial system in history. What has changed is the type and variety of loans on offer today. Mortgage
and auto loans are fairly common and well understood by consumers. New types of loans include home
equity lines of credit, unsecured signature or personal loans, small business loans and deposit advanced
loans. The variety of loans is meant to fill the needs of many consumers with different credit histories,
income levels and borrowing requirements.
C) ………………..
Magnetic stripe plastic cards were invented in the 1960s and became widely adopted in the decades since.
They have been used for different functions and will continue to adapt as technology advances. Initially,
automated teller machine cards allowed consumers to access their funds outside of normal banking hours.
As networks were created and retailers became more comfortable with electronic forms of payment
additional types of cards were created. Credit cards increased in use in the 70s and 80s followed by debit
cards and more recently smart cards. It's almost become a cliché to write a check or pay with cash since
some form of card-based transaction is supported everywhere.
D) ………… ……………
A fundamental change in the banking relationship between financial institutions and consumers is directly
tied to advancements on the Internet. Online banking allows consumers to conduct almost all business
necessary from making wire transfers to paying bills online. Banking customers are able to view and print
electronic statements, make credit card payments, apply for a mortgage, monitor and adjust investment
portfolios, request a replacement credit card or ATM card, ask a question for customer service and
virtually anything else you can think of that would normally be handled in a banking branch.
E) ………………
Typical banking functions like extending a mortgage loan and transferring money between accounts will
only get banks so far in terms of revenue and staying competitive. A more recent development has been
offering investment services administered by third parties. Some banks will offer a wide variety of
investment services that they manage themselves and offer in conjunction with other companies. These
services include annuities, retirement planning and access to stocks, bonds and mutual funds. Investment
services were not typically offered by banks but by partnering with mutual fund companies and brokerage
firms, they provide an opportunity for consumers to conduct all other financial business in one location.
F) …………….. ……………..
All information thus far has focused on business to consumer services such as opening a savings account
or requesting a credit card but businesses require many of the same services. Merchant service accounts
allow businesses to function in much of the same way as standard consumer accounts with the addition of
processing credit card orders and receiving small business financing. As technology continues to advance,
it is likely additional services will be offered by modern banks blurring the lines even more between the
multitudes of financial institutions.
V. Match the different types of bank deposits with their meaning and interpretation
the backbone of your financial life. Your income flows there, and you use
it for everything from paying bills to going to the movies. It’s no wonder
1 checking account
you’d want an account with low fees, good customer service and an
accessible ATM network. If your cash earns interest, even better.
better for keeping a cash cushion that you don’t need for daily expenses
2 saving accounts but could access quickly in an emergency. Convenience transactions
include online or phone transfers and withdrawals.
good for people who have more cash to deposit, want to earn more interest
than with basic savings accounts and want to make withdrawals using
3 money market accounts
checks and debit cards. similar to savings accounts, but tend to pay more
interest.
allow savings for retirement when your employer doesn’t offer retirement
benefits or you want to save more than your employer-sponsored plan
4 certificate of deposit (CD)
allows. These accounts are popular because the funds can be withdrawn
tax-free in many situations or they are tax-deductible.
work better for people who want to earn higher guaranteed interest rates,
and are willing to give up access to their money for a certain time period.
5 Individual Retirement accounts
have early withdrawal penalties that could erase any increase in interest
earned

VI. Read the following text and determine whether the following statements are True or False:
There are two main types of accounts offered by all the major retail banks: current accounts and deposit
accounts. Other accounts offered include savings, multi-service loans, home mortgage loans, personal
loans, budget and revolving credit accounts. A customer may have several different types of account and
more than one account of each kind; a company customer, for example, may require several current
accounts for various purposes.
When the bank account is balanced in the cashbook, this will show how much the business has in the
bank assuming this is a debit balance. It is not possible to have a credit on cash account since it is not
possible to pay out more cash than one has, but it is possible to get a credit balance on the bank account,
where the bank gives the business an overdraft facility. This simply means that the bank agrees to allow
the business to draw more out of its current account than it has paid in up to some agreed limit.
Where the account becomes overdrawn (when more has actually been drawn from the account than paid
in) the bank account in the cash book will have a credit balance emphasizing that the bank has become a
creditor of the business rather than a debtor.
Note that this differs from a bank loan, when the bank lends the business a certain amount of money for a
certain period of time. When the business has an overdraft it will be charged interest by the bank.
Interest and bank charges are a normal business expense account in the same way as other business
expense. Usually the bank makes this charge by deducting it from the business's current account balance
which holds or adds it to its overdraft.
In the business's books it will credit bank account (since it is effectively a payment) and debit bank
interest and charges account.
At the end of every month the bank sends each customer a statement of his or her account as it stands in
the bank's books. It gives a list of all the sums paid in to the account and all the sums paid out from it,
together with the final balance. If a business needs making regular monthly payments, instead of writing a
cheque out each month for the same amount, it makes a standing order to its bank instructing it to make
this payment automatically on the same date each month, until further notice. If the business has a lot of
such transactions, some or all of them may not be recorded in the cashbook until the bank statement is
received by the business.
1 Two main types of accounts are offered by retail banks T/F
2 Company customers cannot require but only on type of account T/F
3 It is not possible to have a credit balance on the bank account T/F
4 Company customers are allowed to have overdraft facility T/F
5 The retail banks become usually creditors of the businesses T/F
6 Bank loan is different from the overdraft facility T/F
7 Charges, fees and interests are the normal business expenses of a commercial banks T/F
8 Customers statements are subject of banks secrecy law T/F
9 Monthly payments of the business are not allowed but only through bank standing orders T/F
10 The cashbook of the bank registers all the transactions of the bank’s customers. T/F
VIII Find in the dictionary the different combinations of words containing the word “account”. Make
sure you understand their meaning and use them in sentences of your own.
______________ account
______________ account
______________ account
______________ account
______________ account
account ______________
account ______________
account ______________
account ______________
account ______________
 GRAMMAR BITE

likely vs. unlikely

Likely and unlikely are both adjectives used to express probability of something to happen or not in the
future. They can be placed before a noun, or with the verbs be, seem and appear:
What is the most likely outcome of the poll?
It seems to be a likely place for a restaurant.
Both likely and unlikely can be followed by a verb in the to-infinitive form:
The economy is likely to recover slowly after the long recession.
The stock price seems unlikely to change over the next few days.
Unlikely can be replaced by not likely:
Zoe’s not likely to arrive before eight o’clock. She doesn’t finish work till seven.
Both adjectives can be used in a that-clause pattern, but it is less common than the likely/unlikely + to-
infinitive one.
It is likely that there will be a general election next year or There is likely to be a general election
next year.
It is not likely that the competitive imbalance that now exists between Japan with all major
industrial nations will be redressed during the foreseeable future / It is not likely for Japan to
redress for the foreseeable future…
Adverbs such as very, quite, highly and extremely make their meaning stronger:
The government is very likely to propose changes to the income tax system soon.
Profits will most likely have risen by about 15% with the economic boom.
Emotional incentives make it far less likely to buy low and sell high.
The probability of likeliness or unlikliness can be underlined by using them with comparative vocabulary,
such as … as, more, (the) most, less and (the) least:
Young and highly educated people are more likely to discuss business than the aged and low
educated ones.
Working in industries like pharmaceuticals, automobile manufacturing and commercial airlines
makes you less likely to be disrupted by Amazon.
In both American and British English, likely is dominantly used as a mid-position adverb, i.e. most
commonly between will and the main verb:
The law will likely change behaviors in the executive branch by creating a more explicit fact-
based decision-making framework to implement programs and be more results-oriented.

I. Find the appropriate missing adjective in the following sentences:

The overall output is still ……… to shrink for a second year running, according to the latest
forecast from the International Monetary Fund.

It is found that publicly traded companies with two-dimensional diversity are 45 per cent more
……….. than those without to have expanded market share in the past year and 70 per cent more
……..likely to have captured a new market.
This type of integration will most (need)……….. in enterprises where massive amounts of data are
used by various business functions.
Modern techniques as derivatives, scenario planning, and business forecasting (be)……… to
change their business options.
They take costly steps to defend against ……………outcomes of bargaining tactics used by
savvy negotiators.
 SPEAKING
Match the following money sayings with their meanings. Draw out five behaviors from them that
predict poor money management later. Discuss in groups about your bad habits and their possible
improvements.
Someone who is known to always pay exactly as
Rather go to bed without dinner than to
1 a promised can borrow money from other people at
rise in debt. (Benjamin Franklin)
any time
A good payer is the master of another’s If you have money, you can get more money through
2 b
purse. good investment.
When you have money, you don’t know if people are
3 A good paymaster never wants workmen. c friendly with you because they like you or because
they like your money
4 Health is better than wealth. d Being free from illness is better than being rich.
If you pay for a service before you receive it, you will
5 Pay beforehand is never well served. e
not get a good service.
6 Money makes money. f Do not lend things.
7 Neither a borrower, nor a lender be. g An employer who pays well is never short of staff.
8 The rich knows not who is his friend. h Do not borrow things: it is wise not to get into debt.

WRITING
Read the following introduction to your 250 word business article on the digital currency expectations
for a global banking service.
There are many signs that the digital currency is just getting started. It is becoming increasingly
clear to banks and financial institutions that bitcoin and blockchain technology will become an
important part of the future delivery of financial services based on media coverage and
investments. As investors realize that many of the applications will be built on the bitcoin
blockchain, they eventually arrive at the conclusion that if these applications succeed, the price of
the bitcoin currency will go up.

TRANSLATION
A.
1. Oricine poate castiga bani, dar nu oricine îi poate administra cu folos. – Anonim
2. Banul poate crea valoare, dar numai valoarea poate crea bani.
3. Prietenia este ca şi banul, uşor de realizat dar greu de păstrat.– Samuel Butler
4. Un om bogat este adesea un un om sărac cu buzunarele pline. (W.C. Fields)
5. Bogatul este cel care este, nu cel care are.
6. Poți cumpăra cu bani o carte, nu și cunoașterea. (Proverb chinezesc)
7. Banca îți împrumută o umbrelă cînd este vremea frumoasă și ți-o se cere înapoi cînd plouă.
(Robert Frost)
8. Cine dă bani mai mulţi pe ceva ce merită, cheltuie mai puţin.
 9. Banii sunt asemenea pantofilor noștri: dacă sunt prea mici, ne rod și ne fac bășici; dacă sunt prea
mari, ne fac să ne împiedicăm și să cădem (John Locke)
10. Dacă vrei să afli valoarea banilor, împrumută! (Benjamin Franklin)
11. Dacă te căsătoreşti pentru bani, te-ai vândut pe datorie.
12. Frate, frate, dar branza-i pe bani.
A1
1. In loc să-ți tii banii la saltea, mai bine îi ții în conturi bancare sau portofolii bursiere.
2. Este puțin probabil să putem prevedea evoluția inflației în condițiile cresterilor incontrolabile a
preturilor la produsele alimentare.
3. Singura posibilitate pentru ca un hacker sa aibă acces la contul tău, este să afle sau să ghicească
(puțin probabil, dar nu imposibil) parola acestuia.
4. Este greu de presupus că acest proces de dezvoltare nu va fi continuat în viitor.
5. Totusi, din ceea ce se cunoaste despre această perioadă, este de înțeles, cu siguranță, că se
foloseau planuri de finanțare complexe.
B.
Livrarea în cont deschis (open account settlement) reprezintă o modalitate de plată folosită numai atunci
când între partenerii comerciali se statornicesc relați bazate pe totală încredere, așa încât nu mai apare
necesară nici o formă de garanție cu privire la respectarea obligațiilor ce rervin părților.
In aplicarea prevederilor contractului comercial, exportatorul trimite marfa sș documentele de însoțire
direct la adresa importatorului, care poate implicit să le preia și să dispună de întreaga partidă, fără a mai
îndeplini alte condiții verificate de o bancă. După primirea mărfii, importatorul plătește contravaloarea la
un termen dinainte convenit, folosind instrumente operative de decontare - cecul, ordinul de plată, trata -
trase asupra unei bănci.
Dacă s-a prevăzut că plata să fie făcută într-un termen mai scurt de 30 de zile, operațiunea este
considerată ca aparținând categoriei tranzacțiilor cu decontare în numerar, iar dacă părțile au stabilit o
plată ulterioară, la 60, 90 sau mai multe zile, operațiunea apare derulată pe baza de credit comercial
descoperit, (uncovered commercial credit) adică fără garanție, acordat pe termen scurt.
C.
Ultimele decenii s-au caracterizat printr-o proliferare a inovațiilor în domeniul financiar, apărând zeci de
instrumente noi, inexistente sau destul de rudimentare în trecut, prin care se oferă facilități de credit,
operațiuni de arbitaj, variate formule de plasamente. Incepând de la simple consultații în probleme bănești
și analize ale rentabilității proiectelor pentru care se cere finanțarea, aceste servicii ajung până la
prospectarea de noi piețe la solicitarea clienților, sprijinirea promovării produselor, obținerea de
informații confidențiale asupra partenerilor și concurenților, medierea unor afaceri, negocierea și
finanțarea fuzionărilor. A devenit uzual ca băncile, prin sucursale și societăți afiliate, să întocmească
analize, să facă demersuri, să trateze și chiar să perfecteze acte în numele celor care le-au mandatat.