Why do we need banks?
The short answer
Banks accept deposits, connect payments, and lend funds to people and organizations that need them. They help move money between savers, borrowers, and sellers.
Deposits and lending
A deposit is money a bank must repay according to the account's terms. Banks manage deposits and make loans and investments. They also manage their money so they can handle withdrawals and payments to other banks.
When a bank makes a loan, it usually creates a new deposit in the borrower's account. This means banks do more than pass one customer's deposit to someone else.
Payment infrastructure
Bank accounts support more than cash storage. They connect transfers, payroll, cards, and electronic payments. Banking services and deposit-protection rules differ by country, so check the rules that apply where you live.