The origins of modern banking go away back to the late 17th century. During that time period, a number of goldsmiths started to deal in domestic and foreign coins and allowed their safes to be used by members of the public to safeguard money, jewelry, etc.
The Bank of England was founded in 1694, but is predated by a number of other European banks, such as the Bank of Rotterdam (1634), and the Bank of Sweden (1656).
Around this time, banknotes began to be issued as goldsmiths’ receipts became generally accepted as evidence of ability to pay. The first checks/cheques were issued also.
In 1695 the Bank of Scotland was founded. It was the first bank in Europe to be totally unconnected with the state. As capitalism started to take off, so too did commercial banking and by the end of the nineteenth century banks were an established presence throughout the Western world.
In the modern era, banking has continued to evolve. Mergers and acquisitions have led to the growth of gigantic banking groups, such as HSBC, Citibank, and Royal Bank of Scotland Group. Additionally, the nature of business conducted by banks has expanded. The growth of Bancassurance has seen traditional high street banks start to sell insurance and assurance products. They have also started to purchase companies that have nothing to do with banking (train companies, airlines, etc) in an attempt to diversify and reduce dependence upon their core banking market. The industry has also become more regulated, with greater protections for customers.
The advent of telephone banking, cash machines, Internet banking, and mobile phone banking has also significantly changed the ways that customers interact with their banks. And the role of branches has changed too, with many of the back-end admin tasks stripped out and carried out instead by service centres. The idea is to leave branches free to focus primarily on customer service and sales.
No doubt the next century will see equally amazing changes in the banking landscape. Ultimately, though, the basics of what banking is about will remain unaltered. Customers look to banks to provide services that help them with the management of their money. New technologies may change the way that those customer needs are met, but in essence what we seek from banks (interest in return for money deposited, and loans to enable us to buy things) will be the same.