Savings banks have been around in Europe for a couple of hundred years, at least I should think. Worldwide the banking industry is one of the most profitable businesses around. Most of us at some time or another save. Some people try to save on a regular basis. This is always a good idea as none of us knows when we may be faced with a huge bill which needs to be paid at once. Years ago people would save their hard earned cash at home but banks grew as a means of making sure that your wealth was securely stored and that you could make a little money on your savings too, by way of the Interest paid.
So to my mind the main purpose of a savings bank is to accept money for saving and pay out interest at regular intervals, often yearly.
From medieval days people started to feel safer entrusting their treasures to others. This could involve saving gold and artifacts and eventually coins of the realm. These early banks often were money lenders as well. Today they still lend money but we have many more institutions that will loan us money also.
Today commercial banks offer a multitude of services, from savings, to loans, to insurance products and many more. There still are a few specific savings banks but most, for example the post office, offer services other than saving .
So the functioning of savings banks is to establish a wealth of funds in order to further invest and secure great returns. Well that is a traditional one and they are hard to find these days. Over many years they will build a professional relationship with their clients which is based on trust.The banks reputation itself is built over many years with it’s investments and customers. If these investments are done well, prudently and legally then the bank should flourish and your savings be safely stored. However of late we are seeing the odd bank which has over stretched themselves and are running into difficulty. One can only hope that these are isolated incidences, as no-one wants to see a run on the banks, as there was in America during the depression.
Savings banks are a great way to keep your money safe and earn a little interest. As a child we invested in our town’s local savings bank. This kept all the profits and benefits in our town. Eventually though this bank was merged with a much larger, nationwide one and lost it’s identity and personal touch. The traditional ones almost had a community feel but I guess that today these no longer exist.