Reviewed by Aug 27, 2020| Updated on
The transactions done with a bank and the services it offers to its customers is collectively known as banking. Banking can be done online, offline, or both ways. A bank is a financial institution licensed to receive deposits and offer loans. Banks also provide financial services, such as safe deposit boxes, currency exchange, and wealth management.
What is Banking ?
You can come across two types of banks—retail banks and investment banks.
- Retail banks typically manage withdrawals and deposits as well as supply short-term loans to individuals and small businesses.
- Investment banks focus on providing corporate clients with services such as underwriting and assisting with merger and acquisition (M&A) activity.
Why is Banking important?
While you can make banking transactions both in a brick-and-mortar location and an online presence, a new breed of banking only maintains an online presence. Online-only banks often offer consumers higher interest rates and lower fees. Convenience, interest rates, and fees are the driving factors in consumers' decisions of which bank to do business with.
Tips and tricks for gaining maximum benefits
- Security: Keeping all your money at home may not be safe as burglars may break into your house when you expect it the least. All your efforts and hard work may go in vain in the case of disasters such as floods and fire. Therefore, the most secure place to put your money is a bank account. As long as you choose a genuine, legitimate bank, the idea of protecting your money is sorted. There are banks that provide guarantee for your money even at the times of financial crisis.
- Convenience: Money kept in a bank account can be accessed from anywhere at any time with the many possible options such as bank branch, ATM, debit card, online banking, and others. Money can be instantly transferred to anyone through numerous ways.
- Savings and Investments: Banking offers you a variety of ways to save and invest to grow wealth. There are valuable options that cater to all your needs beyond just the savings and current accounts. Savings can help keep you afloat at the times of financial crisis or sudden unemployment. On the other hand, investments in mutual funds can help you grow wealth exponentially over time.