Chapter.17 Exam Prep Technology And Other Operational Risks - Financial Institutions 10e Complete Test Bank by Anthony Saunders. DOCX document preview.
Chapter 17 Technology and Other Operational Risks
KEY
1. Two important input factors in financial intermediation are capital and labor.
2. Technological efficiency focuses exclusively on the cost side of financial intermediation.
3. According to Hitachi Data Systems, recovery time from system failures averages 12 hours.
4. The Bank for International Settlements has stated that banks should carry extra capital as a cushion against operational risks.
5. The "flash crash" on the NYSE in May 2010 was directly attributable to the manipulation of LIBOR by Barclays PLC.
6. Noninterest expense has increased faster than interest expense for all U.S. insured commercial banks in recent years.
7. The U.S. Treasury has recently proposed that banks carry a capital cushion against losses resulting from operational risk.
8. Bernie Madoff and his infamous Ponzi scheme is an example of external operational risk to the hedge funds he managed.
9. In recent years, U.S. banks have alone spent $20 billion per year in technology related expenditures.
10. The initial steps of cross selling financial products can easily occur with computer technology.
11. Investing in appropriate technology allows an FI to access lower-cost funding markets.
12. Investment in technology has allowed FIs to lower the amount of non-interest income as a percent of total operating income.
13. Wholesale cash management services allow corporate customers to minimize cash balances and to monitor quickly cash transactions and balances.
14. Appropriate technology may allow an FI to achieve lower-cost funding.
15. Cash management services include the collection, disbursement, and transfer of funds.
16. Account reconciliation redirects funds from accounts in a large number of different banks to a few centralized accounts at one bank.
17. Retail banking services and products in recent years have moved strongly toward electronic payment technology.
18. Although secure communications can be carried out between an FI and their customers in dedicated message centers, the centers have yet to replace e-mail communications as the primary means of customer contact.
19. New retail products and services based heavily on technology often are risky because of the high usage rate necessary to make them positive net present value projects.
20. The success in technologically related innovation often is dependent on changes in regulations and regulatory procedures.
21. Cross-market selling of financial products requires production of the products within the same branch or bank office.
22. Increases in the rate of innovation of new financial products, whether successful or not, is often credited to advances in technology.
23. The increased use of technology may have positive and negative effects on the perceived service quality provided to retail customers.
24. According to economic theory involving economies of scale, larger and more cost-efficient FIs should prevail over smaller, less cost-efficient FIs.
25. If ACX + Y < ACX + ACY, where AC is average production cost and X and Y are products, economies of scope are present.
26. Large scale investments in technology may lead to diseconomies of scale due to excess capacity, cost overruns, and cost control problems.
27. An increase in the cost of the joint production of services as compared to the production of those services independently is an example of diseconomies of scale.
28. Between 2011 and 2014, the dollar value of all methods cashless payment more than doubled.
29. Companies like Google, Amazon, and Facebook have far more experience in cloud computing, artificial intelligence, and big data analytics that most banks.
30. In the U.S., electronic methods of payment account for a larger number of transactions, but a lower aggregate dollar value than non-electronic methods of payment.
31. Compared to the United States, the use of electronic methods of payment is lower in other major developed countries.
32. Big tech firms are increasingly offering financial services, increasing the competitive pressure on FIs.
33. Between 2012 and 2017 the number of consumer complaints to the CFPB grew at an average annual rate of 28%
34. Fedwire is a wire transfer network operated through the Federal Reserve System to assist banks in making financial transactions among themselves, on behalf of themselves and customers.
35. Fedwire is a wire transfer network of over 9,300 international FIs with the Federal Reserve System.
36. As of 2015, the combined value of payments sent over Fedwire and the Clearing House Internet Payment System (CHIPS) often exceeded $5.0 trillion a day.
37. Funds transferred on the Clearinghouse Internet Payment System (CHIPS) are settled at the end of the day rather than intra-day as with the Fedwire system.
38. The Clearinghouse Internet Payment System (CHIPS) is use in clearing mostly international payments such as foreign exchange and Eurodollar transfers.
39. Funds transferred on the Fedwire are settled immediately.
40. Daylight overdraft risk occurs because banks often provide immediate credit to customers for deposits, even though the funds may not arrive until later in the day.
41. CHIPS guarantees that any wire transfer is final at the time it is made.
42. The Fed now charges 20 basis points annually for daylight overdrafts.
43. Regulation F, a part of the FDIC Improvement Act of 1991, requires financial institutions to develop internal procedures to limit settlement exposures to correspondent banks.
44. Technological advances in payment systems appear to have decreased the incentive to commit white-collar crime.
45. In terms of dollar value, cybercrime has passed trafficking in illegal drugs.
46. Losses attributable to the cybercriminals known as the Carbanak group are estimated to be as high as $1.0 billion.
47. The increased use of wire transfers as a replacement for check and cash payments has decreased the risk of fraud.
48. Delaware and South Dakota have become leading states in the distribution of some financial services because of liberal regulations.
49. Usury ceilings place caps on interest rates that FIs can charge on certain types of loans and are established by federal regulatory authorities.
50. The U.S. tax burden faced by domestic FIs has been minimized, in part, by the ability to use international wire networks for the transfer of funds.
51. Currently, banks issue well over half of all new credit cards.
52. The operational risk faced by an FI includes sources other than technology.
53. Regulators have proposed that operational risk should be measured for the purpose of meeting overall capital adequacy.
54. The financial services industry is undergoing a profound change by way of digitization, automation, offshoring, and outsourcing.
55. The growth areas in technology and revenues are now in data analytics, distributed ledger technology and FinTech challengers.
56. Cybersecurity risk represents an ongoing and evolving area for firms to focus on.
57. Which of the following statements regarding cybersecurity are not true.
A. Firms security efforts are intended to protect against cyberattacks by unauthorized parties.
B. Cyberattacks include when unauthorized parties obtain access to confidential information, and or destroy data.
C. Cyberattacks can occur due to severe weather or power and telecommunications interruptions.
D. Cyberattacks include when unauthorized parties disrupt or degrade service and or sabotage systems.
E. Third parties with which a firm does business can be the source of a cybersecurity risk.
58. Which of the following statements regarding data management risk are not true.
A. Rapid adoption of new data technologies like artificial intelligence and cloud-based storage has made data management risk a higher concern for firms.
B. Data management risk is the exposure to loss of value or trust caused by issues or limitations to the firm’s ability to acquire, store, transform, and move its data assets.
C. Companies like Visa and Master Card follow a “closed loop” system meaning they act as both the issuer and acquirer to keep their data management in-house.
D. Institutions that invest in data infrastructure and data management increase their chance of preventing risk exposures.
E. Data management risk allows a firm to analyze trends and information to help keep relationships with stakeholders strong and secure.
59. How can noninterest operating income of an FI be increased by improved technological efficiency?
A. By improving the efficiency of management of information flows.
B. By obtaining access to low cost sources of funds.
C. By linking services to the quality of the FI's technology.
D. By innovating new interest earning products.
E. By complying with all government regulations.
60. How can noninterest operating expenses of an FI be reduced by improved technological efficiency?
A. By improving the efficiency of management of information flows.
B. By obtaining access to low cost sources of funds.
C. By linking services to the quality of the FI's technology.
D. By innovating new interest earning products.
E. By complying with all government regulations.
61. How can interest expense of an FI be reduced by improved technological efficiency?
A. By improving the efficiency of management of information flows.
B. By obtaining access to low cost sources of funds.
C. By linking services to the quality of the FI's technology.
D. By innovating new interest earning products.
E. By complying with all government regulations.
62. Which of the following is NOT a source of operational risk?
A. People
B. Systems and technology.
C. Processes and policies
D. External events
E. Social media
63. Which of the following are potential benefits of technology for an FI?
A. Improved service quality, especially for customers of large banks.
B. The rate of innovation of new products can be increased.
C. FIs can more easily cross-market new and existing products to customers.
D. Improved flexibility in financial transactions for retail customers.
E. All of the options.
64. Which of the following occur when managers undertake growth-oriented investments to increase an FI's size that may be inconsistent with stockholders' value-maximizing objectives?
A. Technology risk.
B. Operational efficiency.
C. Agency conflicts.
D. Diseconomies of scale.
E. Diseconomies of scope.
65. Which of the following wholesale services offered by FIs allows businesses to transfer and transact invoices, purchase orders, and shipping notices automatically?
A. Electronic data exchange.
B. E-commerce facilitation.
C. Electronic billing.
D. Electronic funds transfer.
E. Account reconciliation.
66. Which of the following wholesale services offered by FIs to businesses allows the FI to combine the e-mail capabilities of the internet with the FIs ability to process payments electronically through the interbank payment networks?
A. Electronic data exchange.
B. E-commerce facilitation.
C. Electronic billing.
D. Electronic funds transfer.
E. Account reconciliation.
67. Which of the following partially explains why cash management services have not attracted customers in Europe to the degree that they have in the US?
A. Prevalence of nationwide branching and banking in Europe.
B. Prevalence of interregional banking restrictions in Europe.
C. Prohibitive charges imposed for the use of domestic telephone lines in Europe.
D. Prohibitive charges imposed on such services in Europe.
E. None of the options.
68. As banks and other FIs increase the use of technology, an unintended consequence may be that
A. cost savings are seldom realized.
B. customers are driven away because they still want to interact with a person for certain transactions.
C. innovation of new products tends to take longer periods of time to attract new customers.
D. the marginal cost of adding new customers tends to increase at an increasing rate.
E. None of the options.
69. Which of the following implies reduced unit costs as size or volume of assets increases?
A. Diseconomies of scale.
B. Economies of scale.
C. Economies of scope.
D. Diseconomies of scope.
E. Constant returns to scale
70. Which of the following implies reduced unit costs as the range of products offered increases inputs in producing multiple products?
A. Diseconomies of scale.
B. Economies of scale.
C. Economies of scope.
D. Diseconomies of scope.
E. Constant returns to scale.
71. Large-scale investment projects that lead to excess capacity and integration problems that create cost overruns and control problems are examples of
A. diseconomies of scale.
B. economies of scale.
C. economies of scope.
D. diseconomies of scope.
E. constant returns to scale.
72. Which of the following implies that small FIs are more cost efficient than large FIs, and that in a freely competitive environment for financial services, small FIs may outperform their larger counterparts?
A. Economies of scale.
B. Diseconomies of scale.
C. Economies of scope.
D. Diseconomies of scope.
E. Constant returns to scale.
73. Which of the following occurs if the costs of joint production of FI services are higher than they would be if they were produced independently?
A. Economies of scale.
B. Diseconomies of scale.
C. Economies of scope.
D. Diseconomies of scope.
E. Constant returns to scale.
74. Which of the following best describes economies of scope?
A. They occur when the average cost of production decreases as the level of output increases.
B. They are effects on costs related to managerial ability and other hard-to-quantify factors.
C. They occur when cost savings are realized from using many of the same inputs to produce multiple products.
D. They occur when the average cost of production increases as the level of output increases.
E. They occur when cost increases are realized from using many of the same inputs to produce multiple products.
75. Which of the following best describes economies of scale?
A. The average cost of production decreases as the level of output increases.
B. The effects on costs related to managerial ability and other hard-to-quantify factors.
C. Cost savings are realized from using many of the same inputs to produce multiple products.
D. The average cost of production increases as the level of output increases.
E. Cost increases are realized from using many of the same inputs to produce multiple products.
76. As of December 2014, which of the following represented the highest percent of the dollar value of noncash transactions in the United States?
A. Credit transfers.
B. Card payments.
C. Debit transfers.
D. E-money payments.
E. Checks.
77. As of December 2014, which of the following accounts for the highest volume of noncash transactions in the United States?
A. Checks.
B. Card payments.
C. Debit transfers.
D. E-money payments.
E. Credit transfers.
78. As of December 2014, which of the following represented the highest percent of the dollar value of noncash transactions worldwide?
A. Checks.
B. Card payments.
C. Debit transfers.
D. E-money payments.
E. Credit transfers.
79. As of December 2014, which of the following accounts for the highest volume of noncash transactions worldwide?
A. Checks.
B. Card payments.
C. Debit transfers.
D. E-money payments.
E. Credit transfers.
80. Which of the following statements is NOT true?
A. The Federal Reserve operates the Fedwire electronic payments system while CHIPS is a private network.
B. Fedwire is used to transfer funds from the Fed to the banking system while CHIPS is used to make interbank funds transfers.
C. The Fed guarantees all payments on Fedwire while CHIPS transfers are provisional until settlement.
D. Large daylight overdrafts are incurred on both Fedwire and CHIPS.
E. Fedwire has a fee for daylight overdrafts but CHIPS does not.
81. Which of the following is NOT a risk associated with an electronic transfer payment system?
A. Daylight overdraft risk
B. Wholesale and retail risk
C. International technology transfer risk
D. Competition risk
E. Tax avoidance risk
82. Some analysts and regulators regard this risk as potentially the greatest sources of instability in the financial markets today.
A. Daylight overdraft risk
B. Cybersecurity risk
C. International technology transfer risk
D. Competition risk
E. Tax avoidance risk
83. Which of the following is NOT TRUE concerning The Clearinghouse Internet Payment System (CHIPS)?
A. It has similar intra-day net payment flows as Fedwire.
B. It does not charge explicit fees for intraday overdrafts.
C. It is a privately operated payments network.
D. It allows users end the day with an overdraft, but only for two consecutive days in a row.
E. It makes available $3 billion each day to cover each day’s payment transactions.
84. As far as regulation is concerned, the increased use of technology
A. allows easier monitory of depository institutions.
B. aids institutions in regulatory avoidance.
C. is not a concern of regulators.
D. provides the opportunity for more severe regulatory penalties.
E. makes heavily regulated markets easy to enter.
85. Technological advances and the ability to access a nationwide market from one location allowed the growth of Industrial Loan Corporations (ILCs) during the 1990s and illustrate competitive risks of other FIs. Which of the following is true of ILCs?
A. They can only operate within the state where they are established.
B. They are regulated by the Federal Reserve.
C. The deposits of ILCs are insured by the FDIC.
D. ILCs are subsidiaries of traditional commercial banks.
E. Oversight of ILCs is provided by the Office of the Comptroller of the Currency.
86. Which of the following observations concerning e-money is NOT true?
A. Check writing lays the foundation of e-money.
B. E-money removes the middleman from a transaction.
C. The e-money user transfers the money from his or her bank account to the account of the funds' receiver.
D. The primary function of e-money is to facilitate transactions on the Internet.
E. E-money is not a cost efficient way of managing transactions that are small in value.
87. Which of the following observations is NOT true?
A. The use of electronic methods of payment is far higher in major developed countries other than the United States.
B. E-money payments are virtually nonexistent in the United States.
C. Money stored in e-money accounts and cards is covered by deposit insurance.
D. U.S. FIs have been slow in adopting and using online banking and electronic payment methods extensively.
E. All of the options.
88. Settlement risk is important because
A. of the interdependent nature of many international transactions.
B. of the impact on sovereign country risk.
C. problems may induce countries to limit the freedom of international capital flows.
D. the electronic funds transfer network itself may become insolvent.
E. the Fed's guarantee may prove to be even more costly to the Federal government than the thrift debacle.
89. Daylight overdrafts occur when
A. FIs in different time zones clear transactions.
B. FI debits exceed credits during the day.
C. FI credits exceed debits during the day.
D. the sum of all debits transmitted over the system exceed the sum of all credits during the day.
E. the sum of all credits transmitted over the system exceed the sum of all debits during the day.
90. On Fedwire, daylight overdraft
A. is a bank's positive intraday balance in its reserve account at the Fed.
B. does not occur under the current payments system.
C. invites a fee is 50 basis points, quoted as an annual rate on the basis of a 24-hour day.
D. has a seasonal component.
E. is not a potential source of instability in the financial markets.
91. Suppose that the doubling of a bank's deposit funding allows the bank to triple its loan output. What can you conclude about the bank's production technology?
A. It exhibits economies of scale using the production approach.
B. It exhibits diseconomies of scale using the production approach.
C. It exhibits diseconomies of scale using the intermediation approach.
D. It exhibits economies of scale using the intermediation approach.
E. It exhibits neither economies nor diseconomies of scale.
92. Why has empirical evidence on economies of scale and scope been so contradictory?
A. Data on bank costs are unavailable.
B. Efficiency may be related to overall market conditions.
C. Efficiency may be related to non-quantifiable variables such as managerial ability.
D. Neither the intermediation nor the production approach conform to reality.
E. The methodology to detect economies of scale and scope are still very rudimentary.
93. Which of the following is consistent with economies of scope? The subscript "b" refers to a banking firm, "s" for a securities firm, "AC" is average costs and "TC" is total costs.
A. ACb + s > ACb + ACs.
B. ACb + s = ACb + ACs.
C. ACb + s < ACb + ACs.
D. TCb + s < TCb + TCs.
E. TCb + s > TCb + TCs.
94. Which is the most important banking area in which technology has had an impact?
A. Cash-management services.
B. Residential mortgage lending.
C. Issuance of certificates of deposit.
D. Credit approval.
E. None of the options.
95. Which of the following is NOT a retail banking service?
A. Check deposit services.
B. Point of sale/debit cards.
C. Telephone bill paying services.
D. Pre-authorized debits/credits.
E. Automated teller machines.
96. Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million.
What are average costs for each FI?
A. 0.40 for A and 2.50 for B.
B. 2.50 for both A and B.
C. 2.50 for A and 0.40 for B.
D. 0.40 for both A and B.
E. Insufficient information.
Feedback:
97. Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million.
What can you conclude about the cost structure of the market consisting of the two FIs?
A. There are significant economies of scale because both companies A and B coexist in the industry.
B. There are no significant economies of scale because company A is much larger than company B.
C. There are no significant economies of scale because the unit costs are constant.
D. There are significant economies of scale because the unit costs decline as size increases.
E. There are no significant economies of scale because the unit costs increase as size increases.
98. Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million.
Assume a third FI (company C) operates in the same market with two FIs, and it has $800 million in assets and total costs of $420 million. What can you conclude about the cost structure of the FIs in this market?
A. There are significant economies of scale because companies A, B, and C coexist in the industry.
B. There are no significant economies of scale because both companies A and C are much larger than company B.
C. There are no significant economies of scale because the unit costs are constant.
D. There are significant economies of scale beyond the $500 million asset size.
E. There are no significant economies of scale because the unit costs increase as size increases.
Feedback:
99. A new computer system is expected to cost $40 million and generate annual savings of $12 million over the next five years.
Should the bank invest in this project if the discount rate is 12 percent?
A. Yes, because the net present value of the project is $3,257,314.
B. No, because the net present value of the project is -$3,257,314.
C. Yes, because the net present value of the project is $20 million.
D. No, because the net present value of the project is -$20 million.
E. Yes, because the net present value of the project is $4,980,000.
Feedback: 
NPV = $43,257,314 − $40,000,000 = +$3,257,314
100. A new computer system is expected to cost $40 million and generate annual savings of $12 million over the next five years.
Should the bank invest in this project if the discount rate is 18 percent?
A. Yes, because the net present value of the project is $2,473,948.
B. No, because the net present value of the project is -$2,473,948.
C. Yes, because the net present value of the project is $24.8 million.
D. No, because the net present value of the project is -$24.8 million.
E. Yes, because the net present value of the project is $1,342,688.
Feedback: 
NPV = $37,526,052 − $40,000,000 = −$2,473,948
101. A new computer system is expected to cost $40 million and generate annual savings of $12 million over the next five years.
What is the IRR for this investment?
A. 11.18 percent.
B. 12.98 percent.
C. 15.24 percent.
D. 12.00 percent.
E. 18.00 percent.
Feedback:
IRR = 15.24
102. Spruce Bank is planning to automate some of its back office functions and reduce operating costs. The installation of new computers and software will require an initial investment of $1,000,000. The savings generated because of reduced personnel cost is $200,000 per year. The bank uses an 8 percent rate of discount to evaluate cost saving projects which are expected to last 10 years.
Should the bank undertake the project given the above information?
A. Yes, because the NPV of the project is $500,000.
B. Yes, because the NPV of the project is $342,016.
C. No, because the NPV of the project is -$500,000.
D. No, because the NPV of the project is -$201,458.
E. No, because the IRR of the project is lower than 12 percent.
Feedback: 
NPV = $1,342,016 − $1,000,000 = +$342,016
103. Spruce Bank is planning to automate some of its back office functions and reduce operating costs. The installation of new computers and software will require an initial investment of $1,000,000. The savings generated because of reduced personnel cost is $200,000 per year. The bank uses an 8 percent rate of discount to evaluate cost saving projects which are expected to last 10 years.
On further analysis, it is estimated that the project has a finite life of 5 years, i.e. further investment will be required to generate the same savings. Should they undertake the project if they assume a five-year horizon for evaluating the project?
A. Yes, because the NPV of the project is $500,000.
B. Yes, because the NPV of the project is $342,016.
C. No, because the NPV of the project is -$500,000.
D. No, because the NPV of the project is -$201,458.
E. No, because the IRR of the project is greater than 15 percent.
Feedback: 
NPV = $748,542 − $1,000,000 = −$201,458
104. Spruce Bank is planning to automate some of its back office functions and reduce operating costs. The installation of new computers and software will require an initial investment of $1,000,000. The savings generated because of reduced personnel cost is $200,000 per year. The bank uses an 8 percent rate of discount to evaluate cost saving projects which are expected to last 10 years.
What must be the minimum annual cost savings in order to accept this project? Assume a five-year horizon and 8 percent discount rate.
A. $200,000.
B. $222,256.
C. $250,456.
D. $279,724.
E. $500,913.
Feedback: 
Minimum annual cost savings = $250,456
105. Spruce Bank is planning to automate some of its back office functions and reduce operating costs. The installation of new computers and software will require an initial investment of $1,000,000. The savings generated because of reduced personnel cost is $200,000 per year. The bank uses an 8 percent rate of discount to evaluate cost saving projects which are expected to last 10 years.
The maximum cost savings that can be generated with this new equipment has been estimated to be $264,237. In order to accept this project, what is the minimum number of years the projected savings must be realized before the project breaks even?
A. 3.7 years.
B. 4.7 years.
C. 5.7 years.
D. 6.7 years.
E. 7.7 years.
Feedback: 
Minimum number of years = 4.68
106. The following information is available on the average costs of the three major banks in a given local market. Bank A has assets of $10 million and average costs are 15 percent, Bank B has assets of $20 million and average costs of 13 percent while Bank C has assets of $30 million with average costs of 12 percent. Average costs are measured as a proportion of total assets.
The above figures indicate that
A. there are significant economies of scale still present in the local markets.
B. there are significant diseconomies of scale still present in the local markets.
C. there are significant economies of scope still present in the local markets.
D. there are significant diseconomies of scope still present in the local markets.
E. there is not enough information to determine economies of scale or scope.
Feedback:
107. The following information is available on the average costs of the three major banks in a given local market. Bank A has assets of $10 million and average costs are 15 percent, Bank B has assets of $20 million and average costs of 13 percent while Bank C has assets of $30 million with average costs of 12 percent. Average costs are measured as a proportion of total assets.
Bank B plans to acquire Bank A and in the process cut costs by $100,000. What is the combined bank's average costs?
A. 12.00 percent.
B. 12.67 percent.
C. 13.00 percent.
D. 13.33 percent.
E. 15.00 percent.
Feedback: Combined assets = (10 + 20) = TABA = $30
Combined costs less $100,000 = (1.5 + 2.6 - 0.1) = TCBA = $4.0
108. The following information is available on the average costs of the three major banks in a given local market. Bank A has assets of $10 million and average costs are 15 percent, Bank B has assets of $20 million and average costs of 13 percent while Bank C has assets of $30 million with average costs of 12 percent. Average costs are measured as a proportion of total assets.
By how much should operating costs of the combined entity (Bank A + Bank B) be reduced in order to stay competitive in the local market, ceteris paribus?
A. $900,000.
B. $600,000.
C. $500,000.
D. $400,000.
E. $300,000.
Feedback: AC of combined Bank BA should = 0.12: TA × 0.12 = $30 × 0.12 = $3.6
TC of combined Bank BA = $4.1
Costs should be reduced by ($4.1 - $3.6) = $0.50 or $500,000
109. Match the description with the correct service provided by modern FIs from the list below.
1. Electronic funds transfer
2. Electronic lockbox
3. Treasury management software
4. Electronic data interchange
5. Check deposit services
6. Electronic billing
7. Verifying identities
8. Controlled disbursement accounts
9. Facilitating business-to-business e-commerce
10. Account reconciliation
11. Funds concentration
12. Assisting small business entries into e-commerce
13. Wholesale lockbox
14. Electronic initiation of letters of credit
A feature that records which checks have been paid by the FI. 10
Helping small firms set up electronic infrastructure for payment capabilities and interactive website capability. 12
Encoding, endorsing, microfilming, and handling customers' checks. 5
Coordinating the need for funds early in the day with a wire transfer to allow disbursement of the funds later in the day. 8
Combining the e-mail capability of the internet and the interbank payment networks to assist in the presentation and collection of invoices. 6
Providing for the transmission of invoices, purchase orders, and shipping notices automatically using FIs as clearinghouses. 4
The transmission of payments and payment messages by CHIPS, SWIFT, Fedwire, etc. 1
Allows customers in a network to access FI computers to initiate letters of credit. 14
A centralized collection service where the payments are received on-line for corporate customers. 2
Automating the information flow associated with the procurement and distribution of goods and services between businesses. 9
Moving funds from accounts in several FIs into a few centralized accounts at one FI. 11
Allows efficient management of multiple currency and security portfolios for trading and investment purposes. 3
Using encryption technology to assist in the electronic transaction of business between customers and businesses. 7
A centralized collection service for corporate payments to reduce the delay in check clearing. 13