18 Types of Bank Services

18 Modern Services Offered by Banks to CustomersBanks provide bank services to attract customers, from giving loans, credit and debit cards, digital financial services, and even personal services. However, some essential modern services are offered by most commercial banks. 18 types of banking services are;

  1. Advancing of Loans.
  2. Overdraft.
  3. Discounting of Bills of Exchange.
  4. Check/Cheque Payment
  5. Collection and Payment Of Credit Instruments
  6. Foreign Currency Exchange.
  7. Consultancy.
  8. Bank Guarantee.
  9. Remittance of Funds.
  10. Credit cards.
  11. ATMs Services.
  12. Debit cards.
  13. Home banking.
  14. Online banking.
  15. Mobile Banking.
  16. Accepting Deposit.
  17. Priority banking.
  18. Private banking.

1. Advancing of Loans

Banks are profit-oriented business organizations. So they have to advance a loan to the public and generate interest from them as profit. After keeping certain cash reserves, banks provide short-term, medium-term, and long-term loans to needy borrowers.

2. Overdraft

Sometimes, the bank provides overdraft facilities to its customers through which they are allowed to withdraw more than their deposits. Interest is charged from the customers on the overdrawn amount. Bank Overdraft is different from cash credit.

3. Discounting of Bills of Exchange

Discounting of Bills of Exchange is another popular type of lending by modern banks. Through this method, a holder of a bill of exchange can get it discounted by the bank. In a bill of exchange, the debtor accepts the bill drawn upon him by the creditor (i.e., holder of the bill) and agrees to pay the amount mentioned on maturity.

After making some marginal deductions (in the form of commission), the bank pays the bill’s value to the holder. When the bill of exchange matures, the bank gets its payment from the party, which had accepted the bill.

4. Check/Cheque Payment

Banks provide cheque pads to the account holders. Account-holders can draw cheques upon the bank to pay money.

Banks pay for cheques of customers after formal verification and official procedures.

5. Collection and Payment Of Credit Instruments

Different credit instruments such as the bill of exchange, promissory notes, cheques, etc., are used in modern business.

Banks deal with such instruments. Modern banks collect and pay different types of credit instruments as the representative of the customers.

6. Foreign Currency Exchange

Banks deal with foreign currencies. As customers’ requirement, banks exchange foreign currencies with local currencies, which is essential to settle down the dues in the international trade.

7. Consultancy

Modern commercial banks are large organizations. In this function, banks hire financial, legal, and market experts who advise customers regarding investment, industry, trade, income, tax, etc. They can expand their function to consultancy business.

However, for several reasons, banks need to disclose customers’ information to government and regulatory authorities.

8. Bank Guarantee

Customers are provided the facility of bank guarantee by modern commercial banks.

When customers have to deposit certain funds in governmental offices or courts for a specific purpose, a bank can present itself as the guarantee for the customer instead of depositing funds by customers.

9. Remittance of Funds

Banks help their customers in transferring funds from one place to another through cheques, drafts, etc.

10. Credit cards

A credit card is a card that allows its holders to make purchases of goods and services in exchange for the credit card’s provider immediately paying for the goods or service. The cardholder promises to pay back the purchase amount to the card provider over some time and with interest.

11. ATMs Services

ATMs replace human bank tellers in performing giving banking functions such as deposits, withdrawals, account inquiries. Key advantages of ATMs include:

  • 24-hour availability
  • Elimination of labor cost
  • Convenience of location

12. Debit cards

Debit cards are used to withdraw funds directly from the cardholders’ accounts electronically. Most debit cards require a Personal Identification Number (PIN) to be used to verify the transaction.

13. Home banking

Home banking is the process of completing the financial transaction from one’s own home instead of utilizing a branch of a bank. It includes making account inquiries, transferring money, paying bills, applying for loans, directing deposits.

14. Online banking

Banks offer online banking that allows account holders to access their account data via the internet. Online banking is also known as “Internet banking” or “Web banking.”

Online banking through traditional banks enables customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests. Some even offer online loans and credit card applications.

Account information can be accessed anytime, day or night, and can be done from anywhere.

15. Mobile Banking

Mobile banking (also known as M-Banking) is a term used for performing balance checks, account transactions, payments, credit applications, and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA),

16. Accepting Deposit

Accepting deposits from savers or account holders is the primary function of a bank. Banks receive the deposit from those who can save money but cannot utilize it in profitable sectors.

People prefer to deposit their savings in a bank because by doing so, they earn interest.

17. Priority banking

Priority banking can include several various services, but some popular ones include free checking, online bill pay, financial consultation, and information.

18. Private banking

Personalized financial and banking services are traditionally offered to a bank’s digital, high-net-worth individuals (HNWIs). For wealth management purposes,

HNWIs have accrued far more wealth than the average person, and therefore have the means to access a larger variety of conventional and alternative investments.

Private Banks aim to match such individuals with the most appropriate options.

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