Safeguarding deposits.  Money in a bank is safe.  Banks keep cash in fireproof vaults and are insured against the loss of money in a robbery.  In many countries, the government also insures bank deposits.  This insurance protects people from losing their money if the bank is unable to repay the funds. 

A bank is not only a safe place to keep money but also a profitable one.  Money placed in a savings account earns interest at a specified annual rate.  Many banks also offer a special deposit account for which they issue a document called a certificate of deposit (CD).  A CD pays a higher rate of interest than an ordinary savings account. 

Providing a means of payment.  People who have money in a bank current account can pay bills by simply writing a cheque and posting it.  A cheque is a safe method of payment, and the bank statement provides written proof that payment was made.  Money held in deposit accounts can be transferred or withdrawn quite simply, but holders of these accounts do not have cheque books. 

Many banks also offer credit cards as a means of payment.  People can pay for their purchases at stores and other establishments by using the cards to charge sums up to an amount determined by the bank.  They then write one monthly cheque to the bank to cover all or part of their expenses.  The billers are paid directly by the bank.  

Making loans.  Banks receive money from people who do not need it at the moment and lend it to those who do.  For example, a couple may want to borrow money to buy a house.  To make the loan, the bank uses money that other people have deposited. 

The major obligation of a bank is to give depositors their money when they want it.  But no bank keeps enough cash on hand to meet its depositors' claims if they all demand their money on the same day.  Banks know from experience that such heavy withdrawals, called runs, rarely occur.  If people are confident that they can get their money back, they will leave it at the bank until they need it.  As a result, banks can safely loan or invest a large percentage of the funds deposited with them.  In most countries, the government specifies the percentage of a bank's funds that may be used for loans.  Many governments also require banks to keep a certain percentage of their funds available for possible withdrawal. 

Like all businesses, banks try to make a profit.  They do so by borrowing money from their depositors at one rate of interest and lending the funds at a higher rate.  Banks use some of their income from loans to pay salaries, other operating expenses, and interest on deposits.  The remaining money is their profit. 

Electronic banking.  Many banks have modernized their cheque-handling facilities with computers and other electronic equipment. However, an even more advanced system is gradually eliminating the use of cheques.  This system, called electronic funds transfers (EFT), automatically transfers money from one account to another.  EFT includes three types of facilities: (1) cash dispensers, (2) automated clearing houses, and (3) point-of-sale terminals. 

•  Cash dispensers, also called automated teller machines(ATM), are computer terminals at banks, airports, shopping centres, and other locations.  A customer inserts a special plastic card into the cash dispenser and uses the keyboard to enter a personal identification number (PIN).  People can use the machine to withdraw cash up to a specified limit.  Some machines can accept bank deposits, transfer funds from one account to another, and deal with requests for such items as statements of account and new cheque books.  The cash dispensers of many banks enable people to do their banking at any hour of the day or night, seven days a week. 
  

•  Automated clearing houses are computer centres for the automatic deposit of regular income and the automatic payment of many bills.  An employer, instead of issuing pay cheques or cash, directs the computer to credit an employee's account with the person's pay.  People can also have money for insurance premiums, mortgage instalments, and other regular payments transferred from their bank accounts direct to the accounts of the organizations to which the money is to be paid. 
  

• Point-of-sale terminals are computer terminals that operate in retail stores in some countries.  To pay for a purchase, a customer gives the cashier an identification card, which the cashier puts into the terminal.  Within seconds, the system transfers the amount of the purchase from the customer's bank account to the store's account.  The system, known as Eftpos, has the advantage for the store of checking whether the customer has sufficient funds to pay for the purchases.  It will also detect stolen cards, if they have been reported stolen. 

Other services.  Most banks sell traveller's cheques and money orders, and offer investment and business advice to their customers.  Many banks also provide trust services, which include the establishment and management of trust funds.  A trust fund consists of money, securities, or other property managed by one person or group for the benefit of another.  Some banks also rent safe-deposit boxes to provide a secure place for people to keep important papers and other valuable items.