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Bank One

Banking 1

Introduction to how banks make money and the value they (potentially) add to society.

No more Post-its: How one bank said goodbye to passwords

Why should consumers be the only ones freed from the burden of a password?

As more banks turn to biometric solutions to authenticate their customers , some are also looking at it as a way to make it easier for employees to do their jobs.

For instance, West Milton State Bank in Pennsylvania has deployed palm scan technology at workstations in its six branch locations. The move has allowed the bank’s employees to log in quicker and more securely than before, said Bill Weber, vice president of operations and technology.

The technology, from Fiserv, uses palm-vein authentication to grant employees access to any workstation or application. Employees hover their hand above the specially designed mouse and are validated in about a second, Weber said.

“Now they can log in to an application quickly instead of typing out longer passwords, that require using the shift key and typing a combination of numerals and letters,” he said.

The move to biometrics started with a hunt for a different solution. Last year, the $400 million-asset bank was thinking of purchasing password vault software — a program that keeps a number of passwords in a secure digital location and requires a master password to access — after conducting a security audit.

Here's the 'snoozing' giant that could crush bank stocks

This was a good deal for corporate treasurers, especially for companies like Apple with billions in cash on hand. It was a good deal until the Federal Reserve began to increase interest rates in December 2015 and the banks did not. Moreover, the Fed continued to keep raising rates through 2016 and into 2017 while the banks held the line. They refused to pay up for funds. One reason was the money flowing out of Institutional Money Market Mutual Funds, due to a change in regulations, may have flowed into banks.

At the present time, the effective Federal Funds rate is 1.16 percent and I estimate banks are still only paying 0.45 percent, on average, for money. The banking industry is only paying a little more than one third the Federal Funds rate, overall, for new money. It is paying about one tenth of the Federal Funds rate for deposits.

The biggest banks are paying depositors an estimated 0.11 percent to 0.13 percent for new deposits and turning around and lending this money out at 1.16 percent in the Federal Funds and Overnight markets. This is a very good deal for banks but maybe not such a great deal for corporate treasurers and households.

What happens if one bank closes your account but you have 10 others?

Lets say one bank closes your account due to overdraft that hasn't been paid and they report you to the credit bureau that regulates banks which means you can't open another account.

You can be arrested for over drafting and leaving, a bank account.

Most banks don't mess around with this.

If arrested, they will get restitution and court costs, and so will the court.