The instructor asked the class, "Does anyone know why you should start a bank?"
The question was posed on the first morning of a class entitled "High-Performance Banking," by a bank president who was teaching the class at graduate banking school (the name of which I will not disclose so as to protect the guilty).
I had/have a habit of speaking up (or mouthing off, depending on your point of view), and had done so already across numerous such classes—so in this case I was not necessarily inclined to raise my hand and proffer an answer. But I looked around the room over the approximately 40 or so in attendance, mostly junior management in their 30s and 40s who were being groomed for senior management. It was just like back in "real" college, with people looking down, dazed, disinterested, or generally either unable or unwilling to answer.
As stupid as it sounds, I always feel sorry for the instructor in such situations, and perhaps embarrassed at my own generation and our often rampant apathy. So after a few seconds of silence and seeing that no one was going to raise their hand, I did.
"The reason to start a bank: Well as civilization advanced past hunter-gatherer and currency was developed and moreover wealth was accumulated, the need grew to protect that wealth beyond the capabilities of any one individual or family. So the people of that community/tribe realized the efficiencies of pooling their resources into the creation of a central (so it could be easily watched, likely in what would become the town square), strong, safe place—the vault, and someone to watch the vault—the first bank employee, a security officer.
"Once the mass of wealth was then accumulated in this central place, someone noted that all this money was just sitting in the vault, and if some of it could come out, some individuals could embark on larger projects that would not only help those individuals, but could help the community in general—clearing/draining new cropland, improvements to living shelters, creation of weapons to defend the tribe's wealth (or take another tribe's). For the right to "use" some of this wealth, an agreement to pay back more than was borrowed--interest—was created, and someone to ascertain if the person was trustable with the community's money—the first loan officer—was needed. As it turned out, interest proved quite nifty, as it not only paid for maintenance on the vault and for the bank employees, rather than those items having to be paid for by the depositors, but would also allow the depositors to be paid. These are the reasons to start a bank."
The instructor rolled this eyes as he looked around the room for another answer. "The reason to start a bank is to make money…"
The moral of the story is: Always remember the true reasons to have banks.
1. Security of the depositors and their community.
2. Improvements to the community where the deposits have come from.