Page 531 - Introduction to Business

CHAPTER 14 Understanding the Financial System, Money, and Banking 505

Technology and Business

Online Banking

Internet-based financial services are password. With this information in hand, he or she
increasing at banks and thrifts. These can access your bank account and steal your
so-called Internet banks have no money. When you access an Internet bank website,
physical location and offer customers the make sure that the address is correct.
convenience of banking around the clock from their • Confirm that the Internet bank is an FDIC-insured
home, workplace, mobile phone, and other locations. depository institution. The words Member FDIC or
For example, Sony recently opened an online bank in FDIC Insured should appear somewhere on the
cooperation with Sumitomo Mitsui Banking in Japan website. If you are not sure, go to the FDIC’s
and J.P. Morgan Chase in the United States. Sony is website; select “Is My Bank Insured?”; enter the
not new to financial services, with operations in institution’s official name, city, and state; and click
insurance, leasing, and credit financing through Sony “Find My Institution.” If your bank cannot be found
Finance International. Sony’s online banking accounts at this website, contact the FDIC by e-mail or
offer customers deposit services including bill telephone. If your bank is located outside the United
payments, and are linked to other financial services, States, contact the appropriate government
such as investments, loans, and so on. Eventually, insurance agency to make sure your bank has
Sony hopes to link its financial services to its deposit insurance.
electronic products, such as video games, to allow • Be aware that many times the name of an online
customers doing online video gaming to access their bank is different from its main office at a particular
money online too. physical location. If you hold deposits at both the
If you are thinking about using online banking Internet bank and the traditional bank, your
services with a company, it is important to know if deposits at the two banks are insured for the
they are legitimate and if your money is protected by $100,000 limit available from one bank. If you have
deposit insurance. The Federal Deposit Insurance less than $100,000 in total at both banks, there is no
Agency (FDIC) offers the following tips for safe need to worry about insurance coverage.
Internet banking. Learn to avoid costly surprises and Note that only deposits are FDIC insured. If you
even scams. have investment accounts, pension funds, or other
• Read important information about the bank on its financial assets at a depository institution, these
website. Most websites contain information such as assets are not insured against potential loss.
the official name and address of the bank’s
headquarters, the history of the bank, and its FDIC Questions
insurance coverage. 1. Do you use the Internet to do your banking with
• Protect yourself from fraudulent websites. Be a local bank? If so, why do you like this financial
careful not to be fooled by copycat websites that service? If not, why might you use it in the
deceptively use a name or web address very similar future?
to that of a legitimate financial institution. The 2. How could you make sure that your Internet
perpetrator wants to get you to give personal banking is secure and safe?
information about yourself and your financial 3. Do you think that Internet banking will increase in
assets, such as your account number and the future? Why?

autos, vacations, and so on. They tend to be relatively small depository institutions,
although there are some large, multibillion-dollar credit unions.

Nondepository Institutions
Financial service firms that do not hold deposit accounts are considered to be non-
depository institutions. These institutions play an important role in financing the
long-term investment needs of business firms. Also, they provide a number of
important financial contracts that contribute to the financial security of businesses

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