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Banks are an integral part of the modern financial system, without which the economy cannot fully function. In addition, due to the magnitude of the influence of these organizations, they directly affect the daily life of every person, constantly participating in it. Most people in today’s high-tech world depend on banks and are receptive to even small policy changes. This paper aims to analyze the role of banks in everyday life and the impact of changing banking policies on personal decision-making.
These financial institutions are actively involved in the economy at various levels. However, one of the primary roles of banks is the position of an intermediary (Gobat, n.d.). They accept money from those who want to keep it safe, thus forming deposits, and give money to those who need it, creating a system of loans (Gobat, n.d.). Therefore, one of the most prominent roles of a bank for the average person is a money vault. This financial institution, in this context, can be a reliable safe that will keep existing funds protected, optionally even increasing them in volume by paying interest on deposits. On the other hand, a bank can be a source of loans in cases where a person does not have the opportunity to save up or is in an emergency.
Both of these roles are the most apparent manifestations of banking intermediary functions. However, in today’s world, people are much less likely to go directly to bank buildings with any specific deposit or loan request. Nevertheless, these changes do not reduce the volume of interaction with them. This is actively facilitated by the spread of modern technologies, such as bank cards and contactless payments. These funds allow people to make cashless payments, which is often much more convenient. However, these operations require an individual to constantly contact a bank since all non-cash transactions can only occur through money exchanges in the banking system. Thus, an additional role of banks in the daily life of a person is to maintain the financial system and ensure the smooth operation of all monetary transactions.
The latter factor strongly influences a person’s life, imposing a range of restrictions and financial policies that they must keep in mind. As a consequence, even small policy changes can have a significant impact on important life decisions. The simplest example would be a change in interest rates on loans issued by banks. People often turn to the credit system when they urgently need to acquire a large amount of money to implement a decision. For example, I might need to make a significant purchase that should serve as the basis for a future business. It can be acquiring a new computer or specialized hardware or software with which I plan to earn money. In such a case, an increase in the interest rate would mean a higher final payment on the loan, which I would not be able to afford, forcing me to postpone my plans temporarily. Simultaneously, the opposite situation is also possible – introducing certain credit concessions that can push a person to finally implement long-drawn strategies.
Thus, banks play a significant role in a person’s daily life, ensuring the safety of the financial system and serving as intermediaries in most monetary transactions. Thanks to the development of modern technologies, almost every adult, in one way or another, interacts with banks almost daily, for example, by making cashless payments. As a result, there is a need to monitor changes in banking financial policies closely since they can significantly affect both a person’s routine and their important life decisions.
Reference
Gobat, J. (n.d.). Banks: At the heart of the matter. International Monetary Fund. Web.
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