The process of the world going from “bartering-your-apples-for-my-pig” to the world of modern banking has been a complex one. Banks have developed throughout history to be financial institutions that are licensed to complete deposits and issue credit, and without banks, the financial system would not run as smoothly, or maybe not at all. Over the years, banks have changed and advanced. With these changes, banks have been able to more efficiently manage the monetary system as well as provide more convenience to consumers.
In the beginning, banks were made to help manage currency. Once coins were minted, banks would develop into institutions to help manage a number of transactions. Once nations and empires expanded, they needed a more efficient way of completing financial transactions. As a result, paper bills were invented and were used to finance large-scale transactions such as purchases from foreign countries.
Since both coins and paper bills were of considerable value, it was necessary to have them kept in a safe place. As a result, institutions that keep coins and paper bills in a safe were created. During the Roman era, separate buildings were made in order to store the currencies. Instead of having temples store currency, these new buildings known as banks were designated as the new location for managing finances. During this time, currency was loaned to people in need at interest. As a result, banks were not only present to store the money supply but also lend money to borrowers so that they can finance things such as homes.
During the later centuries, the banking system evolved and expanded. With the economic system of free market capitalism, banks were now competitive business entities. As a result, they would compete to provide consumers with the best services and most appealing loan terms. At first, this economic system would result in a number of bank failures but with the invention of a central bank, the banking industry got more stable.
Over the years, each nation has developed their own central bank in order to efficiently manage its money supply. In the United States, there are a number of Federal Reserve banks that help manage the nation’s money supply. As a result, the Federal Reserve plays a major role in the overall economy.
As well as commercial banks, merchant and investment banks were later created. These banks were able to manage financial securities and help finance mergers and acquisitions. With these institutions, business would have the financial means to partner up with another business. With an investment bank managing their financial assets, they would be able to have more financial stability.
Throughout history, banks have been places to provide individuals and businesses with sound financial management. The ability to offer loans, provide credit, make deposits and manage financial assets, have made banks an integral part of everyday life. With the advances in technology, banks have been able to make managing financial transactions more convenient. Over the last 30 years, we have seen a dramatic jump in technology and with it, a dramatic increase in the ease of banking. Consumers making purchases in the form of a debit card or completing tasks online are recent developments in the timeline of banking. These days you can make deposits, and pay bills on computer or smartphone. Banks are changing the way they process information and are looking to adopt newer methodologies -like blockchain technology- all the time. What does the future of banking hold?
Victor Notaro is an accomplished Corporate Banking Executive with a demonstrated record of success leading consultative and relationship management strategies in the financial services industry. Victor Notaro is skilled at building and managing high performing teams of professionals in commercial and corporate banking, fostering relationships with middle market and multi-billion dollar companies. Victor Notaro’s record reveals exceptional performance in the development of business capital strategy, with expertise spanning start-up of business units, leading YOY revenue growth, and producing sales in the millions of dollars. Victor Notaro is the Senior Vice President, Corporate Banking / MidCorporate Banking at Citizens Financial Group.