Today's Banks Are Not Just For Mortgages, Loans and Investments
Written by: David Arnold Livingston
In today's capitalist world where security is one of the utmost
concerns, the typical problem facing an individual is financial
security. Money-related questions typically asked are: "Where
can I keep my money? What is the best way to invest it and make
it grow? Who can I borrow money from?" And the answer: a bank -
a financial institution dealing with financial concerns.
Banks are known to provide financial services, from storing
assets (liquid or otherwise) to extending credit. From a bank
customer's point of view, this translates to services ranging
from making deposits to asking for a loan. People are now even
capable of paying their bills and most of their purchases thru
different banking methods.
Historically, banks have been seen as heartless and
opportunistic. They were seen as vicious businesses victimizing
the innocent and honest. Of course, eventually, through time,
this view has drastically changed. Banks today are one of the
highly-respected and successful business establishments in the
country. Now that people are more educated about the banking
operations, they have learned to trust these businesses with not
only their savings and assets, but with other transactions as
It is said that the word bank came from the Italian word banca,
which came from Germany and means bench. Money lenders (now
popularly known as "loan sharks") from Northern Italy used to
conduct their business in open areas, each working from his own
bench. Similarly, the term bankrupt (which means broke) was
derived from the term banca rotta, or a broken bench.
Now, I'm sure you've heard of central banks, savings banks,
commercial banks, private banks, etc. What differentiates one
from the other? There are many types of banks.
In a nutshell, here are some of the more popular ones and what
commonly distinguishes each from the others:
Central banks are usually charged with controlling the monetary
policies, including the money supply. They are also tasked with
the printing of paper money. Savings banks traditionally offer
services like savings and mortgages. But at present, they have
expanded to offer other forms of financial assistance.
Commercial banks usually offer financial services to large
corporations or businesses. Private banks manage the assets of
the ultra-rich. They are usually located in jurisdictions with
low taxation and regulation (Yes, those infamous Swiss banks and
There are also merchant banks, which provide capital to firms in
the form of shares rather than loans; investment banks, which
deal with selling of stocks and bonds and with advising on
mergers; retail banks, where the primary customers are
individuals and; universal banks, which offer diversified
financial services and engage in several different banking
How does such a business earn its money? Traditionally, a bank's
main sources of income come from transaction fees from its range
of financial services and from the interests it charges for its
loans. But in the past years, banks have evolved to ensure their
continued profitability despite the changing market conditions.
Banking, investment and insurance functions were merged to cater
to the consumer's "one-stop shopping" mentality.
Indeed, banks have come a long way from the time they conducted
their business on benches. They are changing because people are
changing. And it all started on the day when man felt that his
valuables were no longer safe in his own home. After all, anyone
can sleep more peacefully at night knowing that his assets are
tucked away in a secure place.
About the author:
David Arnold Livingston is a business owner and money manager
with many years of successful financial experience. Visit:
http://www.fenbanks.com/ for lots of great banking information
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