To most, a bank is where the money of many individual lies. However, banks serve more purposes than just storing cash. Because of that, there are different types of banking. Although a single bank can offer several types of banking at once, these types tend to differentiate between the sectors of services offered. According to their functions, banks could be classified into four different types namely commercial, savings, trust, and investment.
Commercial Banking
In this type of banking, investments are made by individuals or firms. These deposits are mostly invested in short term (3-6 months) loans, and can be repaid to the investor whenever he demands them. This helps the bank to keep its assets liquidated while the loans are constantly maturing.
Savings Banking
In this type of banking, small or unused sums of money are deposited in banks for future needs. A particular rate of interest is paid on these deposits. The option to withdraw the deposited amount still remains, but only after a notice had been issued 90 days in advance.
Trust Banking
Individuals, firms and corporations could entrust their funds in this type of banking. The deposits made are classified as trust funds. These deposits have some trust function which comes along with the condition of repayment. Plus, they have certain laws and varying conditions of trust.
Investment Banking
This type of banking requires large sums of money to be invested, thus is best for well off people who want to invest their money. The investments are converted into bonds, acceptances and other investment securities.
Now that you know the types of banks out there, you can choose which would be the best to save your money or that of your company.
