Banking has come a long way, right from trading crops in the barter system to e banking. Let’s take a look at how banking started and how it evolved into what it is today.
Banking has existed for as long as civilization has existed. It is impossible to say when banking properly began. However, we have evidence that it may have started to occur around 8000 BC, although not the same way it works today. It was more of a record-keeping of trades. There could have been specific institutions developed for banking, but we cannot know for sure. All we have are the records of people that recorded their trades in a log.
The first proper banks might have sprung up in ancient Mesopotamia. There is evidence that temples and palaces throughout Babylonia and other cities provided lending activities. Although most of this was not in the form of financial lending, banks lent out seeds and the like. The idea was that the farmers would have products they could work with, and when it was time for harvest, the farmers would pay back their seed loans.
During the medieval period, we had merchant banks. Merchant banks were mainly used to lend money for crops and to finance expeditions across the silk routes. They were also the first places where brokering took place.
The most significant changes in banking came in the 17th to 19th centuries, particularly in London. From around this time, bankruptcy started to spring up. How banks work today is based entirely on these banking concepts. That is, issuing bank debt, allowing deposits to be made into banks etc.
In the 20th Century, banks started to pop up in the way we now know them. Post-World War II, banks start lending money to countries as a whole, and retail banking began to become a thing. A lot of the technology that was developed throughout the 20th Century is still used today, like the ATM systems and SWIFT payments.
Nowadays, online banking or ebanking is commonly used. It is an electronic payment system that allows customers of a bank or any other financial institution to conduct a range of financial transactions through a website. The online banking system typically connects to and is part of the core banking system operated by a bank that provides customers access to banking services in place of traditional branch banking.
The features include being able to check the account statement online, opening a fixed deposit account. You can also pay bills online, such as your electricity and gas bills.
Online banking has made life so convenient that you can also make merchant payments, transfer funds, order a cheque book, buy insurance through a bank app or website, and you can pay your phone bill through a recharge app for mobile.
E-banking is convenient, easy to operate, time-efficient and has made life so much easier. Today, it is difficult to imagine what our life would be like without the advantages that digital banking has provided us. Especially since the pandemic, the role of digital banking has become even more significant.