The Accountant Nov-Dec 2016

Finance and Investment
• Account Types Offered: Most
banks provide various accounts and it
is important to check if the bank offers
the types of accounts you need. Here
are the four many account types to
consider.
• Checking account
• Savings account
• Money market account
• Rewards checking account
• Types of Financial Products
Available: Loans and income
generating assets are the primary types
of financial products available from
most banks. Most of the banks will
offer a wider array of each product type,
but that does not necessarily mean
it the best bank in the market. Loans
include products like:
• Car Loan: Check for low interest
rates, origination fees, and prepayment
penalties. Also, consider the various
loan terms and how these fit your needs
• Home Mortgage Loan: Check for
low interest rates, origination fees or
points, closing costs, and prepayment
penalties. Also, consider the types
of mortgages available, i.e. fixed vs.
variable and 30 year vs. 15 year).
• Home Equity Line of Credit/
Home Equity Loan: Check for low
interest rates, origination fees or points,
prepayment penalties, and closing
costs.
• Credit cards. Check for interest
rates
Asset growth products include
individual retirement agreements,
brokerage accounts and certificates of
deposit.
Customers should note that they
must not stay with the same bank for
every financial product they own. If
a customer can get a better rate on a
mortgage at another bank, let it happen.
Don’t just stick with your bank because
of the relationship you have with them.
• Customer Service, Availability,
and Other Services: Customer service
can make or break your experience
with a bank. A big contributor to good
customer service is how accessible
and interactive the representatives are
irrespective of whether it is physical or
online access.
Apart from customer service, you
need to know if a bank offers other
services including:
• Online Banking: The bank should
be able to offer online banking services
like online querying of your account
balances online. Such online platform
should be up-to-date and user friendly.
• Electronic Statements: Your bank
should be progressive and providing
more online banking features like
e-mailing and posting bank statements.
• Automatic Payments: Your
bank should be able to allow you pay
your utility bill directly, and at fairly
reasonable transaction costs.
• Direct Deposit: This is having your
pay check deposited electronically to
your bank account.
• Wire Transfers: Can you transfer
funds domestically and internationally?
What fees are involved?
• ATM Refunds: If you travel a
lot and use cash, you are going to be
charged “out of network” ATM fees.
Does the bank refund all of these fees,
some of them, or none at all?
Conclusion
There is continued erosion of
confidence yet it is hard to regain it.
Its far-reaching effects are real not
only to the banking operations but
to the entire economic performance.
Moreover, it appears the menace of
confidence crisis caught up with many
economies unaware possibly because
complex mathematical models have
predominantly been applied to manage
risks in the banking system.
A multifaceted approach to
restoring confidence is preferred as
there is no single cure to confidence
crisis. This entails establishing the
banking sector on well-established and
functioning regulatory environment
capable of withstanding external
adverse economic conditions and an
ability to set-up strong support and
enforcement mechanism for a healthy
banking sector to thrive on.
Regulatory structures should be
reinforced with good banking practices.
To this end, there is need to emphasize
on managing the so-called ‘soft risks’
such as behaviours, choices and values.
This calls for a paradigm shift on
structure and governance practices that
are premised on clear goals of creating
more value to the customers and not
maximizing shareholder value.
NOVEMBER - DECEMBER 2016 33