Bank

What is a Bank? 

    “…an establishment for custody of money, which it pays out on customer’s order.”

• Oxford Dictionary

Definition

A bank is the major financial institution licensed to make deposits, withdrawals, giving out loans, and carrying out other financial transactions. It can be characterized by its direct dealing with money both from individuals and organizations, its acceptance of deposits that are repayable on demand, its ability to give out loans on request, its easy withdrawal and payments, and its customer data protection.

Understanding a Bank

The term ‘bank’ originates from the French word ‘Banque’ which means bench or money exchange table. Before the term became widely recognized, the early European money lenders or changers would display currency coins of different countries on a money exchange table for the purpose of lending or exchanging.

Over time, the idea surrounding banks has developed, and this development has led to the categorization of banks to fit different kinds of financial demands. These different banks serve different purposes, notwithstanding, they have an overall purpose; they can be categorized into commercial banks, investment banks, retail banks, and corporate banks. All these banks are regulated by the central bank of each country, in some countries banks are regulated by the national government.

One major feature of banks is that they are available to both individuals and businesses and deals with them preferentially. Through different account types such as certificates of deposit (CDs) and checking and savings accounts, customers can save their cash in the bank with easy access at any time. Banks provide customers with other services such as check writing, deposits, withdrawals, and bill payments. Customers who would like to invest can also participate in investment opportunities provided by their banks and earn interest on every investment made.