MONEY FUND BANKING SYSTEM WITH MULTIPLE BANKS AND/OR RATES
Providing interest to clients' deposited funds without limitation on the number of demand withdrawals from deposit accounts is accomplished by an administration system that keeps all of the records for the clients' deposits and withdrawals, calculates the total of the deposits and withdrawals for all clients, and uses the calculation to determine whether funds are deposited to or withdrawn from one or more deposit accounts in which all clients' deposit funds are kept. Clients can make unlimited withdrawals, such as by check, credit card, debit card, or electronic transfer, through the administrator. By placing the administrator as the holder of the deposit account(s), exemptions to the limitation on earning interest in demand accounts is facilitated; additionally, dispersing the deposit account funds among multiple banks allows the client to obtain FDIC insurance for all of the deposited funds, which may amount to insurance in excess of the statutory maximum allowed (presently $100,000.00).
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CROSS-REFERENCE TO RELATED PATENT APPLICATIONS
This application is a Continuation of U.S. application Ser. No. 09/677,535, filed Oct. 2, 2000, incorporated herein by reference in its entirety, which is a Continuation-In-Part of U.S. application Ser. No. 09/176,340, filed Oct. 21, 1998, incorporated herein by reference in its entirety.
BACKGROUND OF THE INVENTION
1. Field of the Invention
This invention generally relates to the field of account transaction processing, and more specifically, an improved system for processing and administering a demand account or money market account in combination with an insured deposit account, and optionally where the accounts are distributed over a plurality of banking institutions.
2. The State of the Art
The Federal Deposit Insurance Corporation (“FDIC”) is a federal governmental entity that provides insurance for deposits in most banks and savings institutions in the United States Bank deposits are insured by the FDIC's Bank Insurance Fund (“BIF”) and savings institutions' deposits are insured by the FDIC's Savings Association Insurance Fund (“SAIF”). The rules governing insurance of deposits of institutions insured by the BIF and the SAIF are the same. The FDIC bases insurance coverage on the concept of ownership rights and capacities: funds held in different ownership categories are insured separately from each other; and funds owned by the same entity but held in different accounts are subsumed under the same insurance coverage. The amount of insurance coverage provided to depositors of each institution insured by BIF and SAIF is the same:$100,000.00 to the owners(s) of the funds in the account(s), including principal and interest.
As disclosed in our prior application Ser. No. 09/176,340 referenced above, a system is provided for managing a plurality of demand accounts for multiple clients whose funds are held at a banking institution in a single insured deposit account. That system provides an entity with the ability to deposit funds into a demand account from various sources, and to make payments from the demand account via different instruments, without the limitation as to the number of transfers, and still earn interest on the funds in the clients' accounts because the funds are effectively maintained in a deposit account. Even with the above-mentioned innovative system, investors carrying amounts in excess of $100,000 in their accounts are disadvantaged because the FDIC insurance is limited to $100,000, so any amount over $100,000 is not protected by FDIC insurance. It was with this realization that the present invention was made.
OBJECTS AND SUMMARY OF THE INVENTION
One object of the present invention is to provide a system for managing a plurality of demand accounts for multiple clients whose funds are held at a banking institution in a single insured deposit account.
Another object of the present invention to is provide a system for managing a plurality of demand accounts for multiple clients whose funds are held at one or more banking institutions in one or more single insured deposit accounts that, from the viewpoint of the investor, removes the $100,000 limitation of FDIC insurance for that individual investor.
Still a further object of the present invention is to provide a system for administering a plurality of accounts containing in excess of $100,000 and continue to qualify for FDIC insurance.
These and other objects are achieved by providing a system that administers individual client deposits to and withdrawals from each of their demand accounts. The system includes a database having each client's information for each account administered. The system monitors the use of the funds from each account by selectively authorizing or rejecting each demand payment request for each account of a particular client. Periodically, net transaction information is determined from the sum of the demand account deposits and withdrawals. The net transaction information is used to determine whether to deposit funds or to withdraw funds from a single deposit account to a client's demand account(s) while updating the database for each client's deposit and authorized demand payment. The system then determines whether each client's account contains more than a specified amount (e.g., $90,000) and distributes any amounts over the specified amount into another account at a preselected banking institution.
In practice, when an investor's account balance exceeds $90,000 in any one account, the excess funds are automatically moved to a second deposit account at another preselected bank. The client will maintain one insured deposit clearance account while the multiple deposit accounts will be transparent to the investor. All transactions to and from the accounts will post to the investor's insured deposit account, although they may be debited from multiple deposit accounts held at various banks. At the time an Insured Deposit Account is opened, the investor is given the option to choose a preferred bank, to chose a list of preferred banks in a desired (or random) order of preference, and to exclude one or more banks. The system will debit and credit the multiple deposit accounts on the investor's behalf, and in the event that the investor does not preselect a bank, the system will automatically designate a bank or banks. The client may also select the order of preference for deposits and withdrawals. For example, if the investor opened his Insured Deposit Account with $170,000, he could also indicate that his assets should be invested in Bank A and Bank C. He may also indicate that bank C is preferred. In this example, $90,000 would be deposited into Bank C and $80,000 into Bank A. If a check were written or the investor chose to redeem funds directly, the withdrawals would be made from Bank A. Withdrawals would not be made from Bank C until all funds had been redeemed from Bank A. Similarly, if the investor chose Bank C as preferred and chose to exclude Bank B, then $90,000 would be deposited into Bank C and $80,000 into Bank A. The investor also can choose the deposit cap for each of multiple banks selected, or can specify deposit caps for default banks chosen by the system (e.g., no bank to hold more than 40% of the inventor's funds). Of course, the investor can also specify that all funds be held in a single bank, even if the amount exceeds $100,000. The report the investor receives may refer to all of the assets and transactions in the investor's Insured Clearance Account (a single account), or the investor may be shown a report listing all of the sub-accounts (if any) where the funds are held and in which transactions occurred.
The choice of Banks is held on the investor's account and the system will read the Bank indicator and determine which bank deposit account should be debited or credited. The system will automatically group together all transactions for each bank. At the end of the business day the deposit accounts at the various banks with be either debited or credited. The debit or credit to the deposit account is the net transaction for all activity that occurred that day.
As a result of the present invention the investor earns interest on the balance in his Insured Deposit Account where the interest rate earned can be the same regardless of the bank(s) selected, or may vary depending on the banks selected, while continuing to qualify his account funds for FDIC insurance.
BRIEF DESCRIPTION OF THE DRAWINGS
In the drawings, in which like references characters designate like or corresponding parts throughout the several views, the view are:
DETAILED DESCRIPTION OF SPECIFIC EMBODIMENTS
The present invention will be described with reference to an administrator, which can be a brokerage firm, a bank, or another financial entity with which clients can institute financial transactions such as deposits and demand payments. The administrator appears to each client as if it were, at least in part, a bank, by accepting deposits for the client's accounts and by authorizing (and then making) payments demanded by the client from his or her account. The funds for all of the clients are pooled into a single deposit account that is maintained as an insured deposit account at a licensed banking institution.
Referring now to
Still referring to
After processing the debit procedure, the system will review the bank preference list and select the appropriate bank to debit 125A. The system will sort all the daily transactions by the bank 125B (see
The system will then determine whether funds are available 122, which function is also associated with other participant withdrawals 120. If the funds are available, the account is debited 225. If the funds are not available, however, the system determines whether a credit line is available 123. If a credit line is available, then funds are advanced 230 to cover the debit; if not the transaction is rejected 124.
Thus, by practicing this invention, the client is provided with FDIC insurance in excess of $100,000.00 because the client's holdings are maintained in multiple insured deposit accounts, which may be in multiple banks.
The foregoing description is meant to be illustrative and not limiting. Various changes, modifications, and additions may become apparent to the skilled artisan upon a perusal of this specification, and as such are meant to be within the scope and spirit of the invention as defined by the Claims.
1. A method for managing a plurality of respective client transaction accounts associated with a plurality of respective clients for a plurality of transactions, said method comprising:
- (a) accessing, by one or more computers, a database maintained on one or more computer readable media for carrying out one or more of the following steps, wherein the database comprises information for each client transaction account, wherein client transaction account funds for the client transaction accounts are aggregated with funds of other client transaction accounts in one or more of a plurality of FDIC-insured and interest-bearing aggregated deposit accounts held at one or more of a plurality of banking institutions, and wherein the information for each of the client transaction accounts includes information on each client's funds held in said insured and interest-bearing aggregated deposit accounts, with one or more of the aggregated deposit accounts held in each different one of the plurality of banking institutions;
- (b) administering clients' deposits/transfers to and withdrawals/transfers from each of said client transaction accounts using the one or more computers, said administering step comprising processing, by one or more computers, transaction data associated with each of more than six (6) withdrawals/transfers by check and/or debit card, within a month from each of a plurality of said client transaction accounts, with the transaction data comprising a respective amount for each respective withdrawal/transfer;
- (c) determining, by one or more computers, on a regular basis one or more net transactions, with each net transaction comprising a sum of said client deposits/transfers to and/or withdrawals/transfers from a plurality of said client transaction accounts of a plurality of clients;
- (d) determining, by one or more computers, based at least in part on one or more of said net transactions, whether to deposit/transfer funds to or withdraw/transfer funds from said one or more FDIC-insured and interest-bearing aggregated deposit accounts, said determining step comprising: (i) determining by the one or more computers whether each client's funds held in one of the banking institutions in the one or more FDIC-insured interest bearing aggregated deposit accounts held therein is more than a specified amount; and (ii) generating data by the one or more computers for distribution of any amounts over said specified amount into at least one other FDIC-insured interest bearing aggregated deposit account at least one other of the banking institutions in which the total of said client's funds therein will not exceed the specified amount;
- (e) processing needed deposits/transfers to, or needed withdrawals/transfers from said one or more FDIC-insured and interest-bearing aggregated deposit accounts based on said determining from said at least one aggregated net transaction step, so that more than six (6) withdrawals/transfers are made during a month from each of a plurality of said FDIC-insured and interest-bearing aggregated deposit accounts; and
- (f) updating by computer the database with each client's deposits/transfers to and withdrawals/transfers from said each client's respective transaction account.
2. The method of claim 1, wherein more than six (6) withdrawals/transfers are made during a month from each of two of said FDIC-insured interest-bearing aggregated deposit accounts.
3. The method of claim 1, further comprising:
- receiving from respective one or more computers associated with respective banking institutions from the plurality of the banking institutions interest earned data on funds of the clients held in the FDIC-insured interest-bearing aggregated deposit accounts held therein;
- processing the interest earned data to cause distribution of interest earned from said FDIC-insured interest-bearing aggregated deposit accounts to said transaction accounts; and
- updating the database based on interest paid to and client's deposits/transfers to and withdrawals/transfers from each of their respective transaction accounts.
4. The method of claim 1, wherein one or more of said withdrawals/transfers from at least one of said one or more FDIC-insured interest-bearing aggregated deposit accounts are requested in person.
5. The method of claim 1, wherein one or more of said withdrawals/transfers from at least one of said one or more FDIC-insured interest-bearing aggregated deposit accounts are requested by mail.
6. The method of claim 1, wherein one or more of said withdrawals/transfers from at least one of said one or more FDIC-insured interest-bearing aggregated deposit accounts are requested by messenger.
7. The method of claim 1, wherein one or more of said withdrawals/transfers from at least one of said one or more FDIC-insured interest-bearing aggregated deposit accounts are requested by telephone and distributed by mail.
8. The method of claim 1, wherein one or more of said withdrawals/transfers from at least one of said one or more FDIC-insured interest-bearing aggregated deposit accounts are requested by automated teller machine.
9. The method of claim 1, wherein the client transaction account funds for at least one client are held in FDIC-insured interest-bearing aggregated deposit accounts among a fixed plurality of banking institutions so that FDIC insurance coverage greater than the maximum FDIC insurance coverage available for deposits of a client held in a single banking institution is obtained for that client.
10. The method of claim 1, further comprising:
- determining a client's preferences for banking institutions to hold its funds; and
- causing distribution of any amounts over said specified amount by depositing/transferring to or withdrawing/transferring from said FDIC-insured interest-bearing aggregated deposit accounts in dependence on the client preferences for banking institutions.
11. The method of claim 1, wherein clients' funds are deposited and/or transferred to said client demand accounts by at least one method selected from the group consisting of check or draft, debit card, wire or electronic transfer, ACH credit, third party credits, and a sweep from another account.
12. The method of claim 1, where the processing is of transaction data comprising six (6) or more withdrawals/transfers by check, within a month from each of a plurality of said client transaction accounts.
13. The method of claim 1, where the processing is of transaction data comprising six (6) or more withdrawals/transfers by debit card, within a month from each of a plurality of said client transaction accounts.
International Classification: G06Q 40/00 (20060101);