What is Bank?
A bank is a for-profit business. The product provided by the bank is financial services. There are many types of financial services offered by banks today and perhaps even more in the past. Most true banks must be licensed by the government and work according to strict rules, laws and regulations.
Some of the financial services which are provided by banks include accepting deposits, lending money and recording financial transactions. Some banks, in fact almost all banks used to issue bank notes for their customers to use as currency. This was more likely in an isolated area where there was a limited amount of gold or silver to use for day to day transactions, and the difficulty and safety of carting around gold or silver bullion was obvious.
Some banks sell insurance to their customers, others sell investment products or may even sell securities such as stocks and bonds. Banks often issue credit or debit cards, transfer money from one bank to another, sometimes even in different countries, exchange currency from two different countries, and cash checks. In addition, most banks have safety deposit boxes available, where the customer is able to leave small valuable items protected by bank security. In addition to banks, there are some banking institutions which do not meet the legal definition of a bank, but still provide some banking services. These include credit unions, savings and loan institutions, building societies and some insurance companies.
The influence of banks on politics and economics has been known for centuries. The banks have made their profit in the past by the interest rates charged on loans and by the lending of the deposited monies from the customers to earn interest. In recent years, the low interest rates received from lending money and the lower savings levels by many individuals, much of the profit banks earn come from transaction charges, such as overdraft fees and service charges.
In the past, banks were usually housed in a very secure building, often designed to look conservative so that customers would be assured their funds were being kept safe. Nowadays though, you find banks located in supermarkets or other retail stores, in small kiosks, as drive-through services. Some banks even exist entirely on the internet and have no bricks and mortar locations. You can do most banking transactions on the internet, through the mail, or by telephone, with proper security measures.
by Nathan.Smarty 19 years ago