“
Banks, whether brick-and-mortar institutions or online, manage the flow of money between people and businesses. More specifically, banks offer deposit accounts that are secure places for people to keep their money. Banks use the money in deposit accounts to make loans to other people or businesses.
“Bank” is a broad term that encompasses a number of different financial institutions. Understanding the various types of banks matters as they aren’t all alike in the services or products they provide and the functions they serve. Some are consumer-facing, meaning they directly serve the general public. Others play a more strategic role in the flow of money through the economy. Take a peek under the banking umbrella. You’ll find the following:
- Central banks
- Retail banks
- Commercial banks
- Investment banks
- Shadow banks
- Savings and loan associations
- Credit unions
A bank is a financial institution regulated at the federal level, state level or both. The primary role of banks is to take deposits and make loans. But banks can offer a wide range of products and services, including:
- Deposit accounts (checking accounts, savings accounts, CDs, money market accounts)
- Loans, including mortgage loans, auto loans and personal loans
- Credit cards
- Check-cashing services
- Wealth management services
- Insurance
- Business banking
A financial institution is an entity that engages in transactions involving the movement of money or financial assets from one place to another. Examples of financial institutions include:
- Banks
- Credit unions
- Savings and loan associations
- Small business investment companies
- Mortgage lenders
- Investment broker-dealers
- Credit card companies
- Insurance companies
“
Analysis – “There are many more utilities to a bank than just accessing a checking account, essentially banks seem to be financial institutions that hold lots of money, give loans, and take advantage of having large amounts of capital. There are also many types of categories for banks.” – Easton Nguyen
