Evolution of banking services

Banks have served as one of the main underpinnings of society since civilization began. They have slowly evolved over the centuries, moving slowly from simple counting houses and places to store physical treasures to the modern institutions of today. Banks can now offer products and services that were undreamed of even in your parents’ day. Of course, they still provide traditional services such as checking and savings accounts, certificates of deposit and safe deposit boxes. But they now provide a wealth of electronic benefits that can rival those of any other type of retail financial institution.

Debit cards, internet banking, automatic bill payment and email and text alerts are par for the course at most major banks, and annual statement providing complete breakdowns of consumer spending and investing are common as well. But modern banks offer much more than mere technological convenience. They also provide sophisticated services such as trust departments, which can assist with investment, insurance, tax and estate planning.

Investment brokers are now familiar partners with banks, and many branches now provide an investment consultant on location. This person can usually offer everything from stocks and bonds to mutual funds, IRAs and qualified plans, life and long-term care insurance and general financial planning. Of course, banks also still offer a wide range of both individual and commercial loans (although the subprime market is gone.)

Conservative investors can still find a full range of CD offerings, along with a variety of money market accounts that pay higher interest than checking or savings accounts. But rate hounds should look further than their local bank branch in their search for the highest rates. Internet banks and stock brokers also offer FDIC-insured CDs that generally pay higher rates of interest than what they may find listed in their local bank lobby. Internet banks such as Everbank are able to pay higher rates than brick-and-mortar banks because of their lower overhead, and investment brokers (including perhaps the ones at your local bank branch) may have callable CDs that pay higher rates as well.

The subprime meltdown of 2008 has eliminated the subprime mortgage market, thus making it much more difficult for many prospective borrowers to qualify for home loans. Most banks have been forced to absorb severe losses from delinquent mortgage holders who fell behind on their payments. A number of banks have had to write off billions of dollars of toxic assets (assets that have actual value but not a definable market value that can be recorded on the balance sheet).