Objective 4.02 Understand the banking system. Topics •Classification of financial institutions •Common payment services •Federal Reserve System Classification of financial institutions Classification of Financial Institutions •Depository –Earns money to finance their business by accepting deposits from customers –Types include: •Commercial banks, which offer many different services, including savings, loans, and checking accounts. •Savings and loan associations (S&Ls), which traditionally specialize in savings and home loans, but now are very similar to commercial banks. •Mutual savings banks, which are owned by the depositors and specialize in savings and home loans. •Credit unions, which are not-for profit, serve their members only, and are owned by their depositors.