What is a Bank

Definition: A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as: conducting current accounts for his customers, paying  cheques drawn on him, and collecting cheques for his customers.

Basics: Banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accord.

History: Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe. One of the most famous Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in 1397. The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy.

Banking Products:

—  Retail banking

—  Checking account

—  Savings account

—  Money market account

—  Certificate of deposit (CD)

—  Individual retirement account (IRA)

—  Credit card

—  Debit card

—  Mortgage

—  Home loan

—  Mutual fund

—  Personal loan

—  Time deposits

—  ATM card

—  Business (or commercial/investment) banking

—  Business loan

—  Capital raising

—  Project finance

—  Risk management

—  Term loan

—  Cash Management Services (Lock box, Remote Deposit Capture, Merchant Processing)