Banking

History, Current Trends, and how Technology has affected the Banking Industry

Table of Contents

Introduction1

Historical development1

Roots of banking in Antiquity1

The Development of British Banking Royal Exchanger2

Goldsmiths and the evolution of Banking3

The evolution of Current Accounts3

Current trends in the Banking Industry3

Diminishing Distinction between Commercial Banks and Investment Banks3

The Narrow Banking and the effects in the economy5

Impacts of technological advancements on the Banking Sector6

Agency banking6

Plastic money7

Online banking7

Mobile banking8

Benefits of Technology10

Return on Investment10

Increased revenues10

Loyalty of the customers10

Challenges faced by banks11

A heavy investment11

Staff training11

Keep up with the pace11

Conclusion12

History, Current Trends, and how Technology has affected the Banking Industry

Introduction

This paper discusses the historical developments, current trends, and the impact of technology on the banking industry in the world.

Historical development

Origin of the word “Bank”- Opinion is divided in regard to this. According to some authorities, the work “Bank” itself is derived from the words “bancus” or “banqee,” that is, a bench. The early bankers, the Jews in Lombardy, transacted their business on benches in the market place. When a banker failed his “banco” was broken up by the people, hence the word “bankrupt.” This etymology is however, ridiculed by Macleod on the ground Ages.

There are others, who are of the opinion that the word “bank” is originally derived from the German word “back” meaning a joint stock fund, which was italianised into “banco” when the Germans were masters of a great part of Italy. This appears to be more possible. But “whatever” is the origin of the word 'bank', as famous historians quote “It would trace the history of banking in Europe from the Middle Ages.” (Peter 2001, p. 190).

Roots of banking in Antiquity

As early as 2000 B.C., the Babylonians had developed a banking system. There is evidence to show that the temples of Babylon were used as banks and such great temples as those of Ephesus were the most powerful of the Greek banking institutions. But the gradual weakening of religion soon destroyed the public sense of security in depositing money and valuables in temples, and the priests were no longer acting as financial agents. The Romans did not organize State Banks as did the Greeks, but their minute regulations, as to the conduct of private banking, were calculated to create the utmost confidence in it. With the end of the civilisation of antiquity, and as a result of administrative decentralization and demoralization of the Government authority, with its inevitable counterpart of commercial insecurity; banking degenerated for a period of some centuries into a system of financial makeshifts. But that was not the only cause. Old prejudices die hard, and Aristotle's dictum, that the charging of interest was unnatural and consequently immoral was adhered to fanatically. Even now some Mohammedans, in obedience to the commands contained in that behalf in their religious books, refuse to accept interest on money loans. The followers of Aristotle's dictum forgot that the ancient world, the Hebres included, although it had to system of banks that would be considered adequate from the modern point of view, and maintained moneylenders and made ...