Traditional Banking Activities

A bank is a business, and just like any other business, they need to make money. However in the case of a bank, the product that they sell and buy happens to be money and financial products. Their customers are account holders, and banks provide a service to these customers by acting as agents for holding their current checking and savings accounts, or providing loans or other financial instruments such as CDs, cash management trusts or money market funds.


In their day-to-day business, a bank will perform a variety of banking related services. Some of these services might include paying checks drawn against the bank by customers, collecting checks that are deposited by customers into their accounts, or enabling customer payments via electronic methods such as an ATM, EFTPOS or transfer services.

Banks also borrow and lend money to each other and to consumers. On a daily basis, banks will borrow money by accepting term deposits or issuing banknotes and bonds, or lend money by making advances to customers’ accounts, by making installment loans, or by investing in debt securities and other investment vehicles.

Having a bank account is considered an indispensable part of daily life, and it’s almost impossible to carry on your own day-to-day business, pay bills or pay rent, without a bank account. Non-banks, such as remittance companies, may provide payment services for some purposes, but they are not generally considered a substitute for having a checking or savings account at a bank or credit union.

A bank account is essential for building a financial profile, and certainly for getting a mortgage or an auto loan. Most loans that are borrowed by households, individuals or businesses that are not primarily financial companies, are in fact funds that are borrowed from banks. Non-bank lenders may provide an adequate substitute for a bank loan in some cases, but if you are looking for a mortgage, an auto loan or a money market account, chances are you are going to go to a bank to get it.