What is Banking activity? Definition of Banking activity, Banking activity Meaning
Banking activity is the set of intermediation functions and responsibilities that banks exercise as the basis of their economic activity.
On a general level, banking activity is based on the many day-to-day operations that the banking sector carries out in different economies. These focus primarily on the control and management of savings and investment.
All these operations respond to the need to position the banking sector as an outstanding vehicle for savings or investment for families and companies around the world. In other words, it assumes a place of intermediation.
The work that makes up this activity is focused on the objective of every bank, which is the achievement of profitability. That is to say, of the greatest possible economic benefit.
Most of the banks seek to increase their profits by setting interest rates on their money loan actions, as well as compensation for the performance of many other financial services.
Origin of banking activity
The history of banks has spanned all kinds of historical stages. That said, from its origins, the activity in this area was based on the custody or deposit of goods or money, as well as the granting of loans to individuals and companies in different ways.
The evolution of society and the appearance of historical milestones such as commerce, the middle class or the stock market have marked the banking operation to such an extent that different functions and operations have appeared.
Main lines of banking activity
The activity carried out by banks and credit institutions can be classified into different lines or branches:
- Financing: Banks are support agents in the creation of businesses, the stimulation of economic activities by facilitating investment or the possibility of purchasing real estate and other assets. To do this, they grant loans or credits of all kinds.
- Custody and deposit: One of the basic pillars of banking throughout its long history is security. Families and companies rely on these entities to securely store their valuables, important documents, precious metals and their savings.
- Issuance of titles and securities: Through the issuance of various financial products, banks intervene in financial markets.
- State or community responsibility : Whether it is a common private bank or a state or plurinational central bank, the banking activity also points to its responsibility towards the community in which it operates. In this way they facilitate the control of the monetary mass of the countries or carry out social tasks.
- Other tasks: In addition to the above, the banking activity also includes advisory tasks in different matters such as insurance, home economics, labor or tax issues...
Evolution of banking activity
In recent decades, banking activity has been transformed and adapted, to a great extent, due to the technological transformations experienced.
At the same time, the uses and preferences of banking customers have changed considerably, supported by the emergence of the Internet and its universal access on all types of devices.
In this sense, the new activity of electronic banking is focused on the digital aspect, and to the detriment of the old face-to-face and branch model.