Banking Industry and its financial structure
Since ages we have seen different agencies that have helped people borrowing money to meet their various expenses. Accordingly, banking industry serves as financial intermediary, thus providing a link between depositors and borrowers. Commercial banks and thrift institutions form the majority of depository institutions. While commercial banks take deposits from households and corporate businesses, thrift institutions cater to the deposits coming from saving accounts. While the functions of money include the transactions in cash, credit card issued by banks, is used as a medium of exchange and a savings bank passbook can be a form of the store of transacted value. However, there are certain conditions required for the creation of money, which include, mainly, the consenting depositors and borrowers who are willing to borrow the funds. This forms the basis of any financial structure in banking industry.
Financial Services Modernization Act of 1999 paved the way to allow commercial banking, investment banking and insurance underwriting, under one umbrella, thus consolidating the financial services, where banks played the major role. The act also powered banking industry to make equity investments in non-financial firms, which has affected the banking industry, completely.
Technological advancement in banking system
The technological advancement, as experienced in every sphere, has strengthened the financial structure of banking industry in a positive manner. With the advent of internet banking and other e-commerce transactions, banking industry is poised to perform in the new role as the functional link with depositors and borrowers. However, as privacy of consumers is of utter importance, regulation from FTC in this regard would help to solve the related problems.
ATM and credit cards
Variety of recent financial products, like ATM and credit cards, from the banking sector has provided consumers with tremendous opportunities. However, there is a need to safe guard the interest of both the customer and the bank, in the wake of using internet and e-commerce applications. Nevertheless, with the evolution of this structure, banking industry is standing on sound footing, as different banks have tied up with established electronic payment gateway agencies, which facilitate the e-commerce payment transaction in a smooth and safe manner.
Readers can expect more news on banking industry, in future, on these pages. Meanwhile they should scan through topics to learn about other issues, in detail.