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Imagine a time when transactions didn’t involve cards, cash, or even coins. Picture marketplaces bustling with activity, where goods exchanged hands as currency.
From ancient times to the modern era, banks have been the bedrock of financial systems, evolving alongside human civilization. While the purpose of banks remains unchanged—to facilitate financial transactions and provide a safe space for savings—their methods and technologies have undergone a remarkable transformation over the years. Lending, a fundamental function of banks, has traversed a particularly incredible journey from its ancient origins to the cutting-edge innovations we see today.
This year, MeridianLink is particularly excited to observe International Day of Banks on December 4, 2023. Since 2015 this day has been annually commemorated all over the world to recognize the collective significance of banks for safeguarding the effective functioning of the global monetary and financial system. It’s the perfect moment to not just celebrate the past but embrace the evolution of banking.
In honor of this day, let’s travel through time, exploring how banking, and lending practices in particular, have transformed over the ages.
Ancient Beginnings: Tracing the Roots of Banking
The concept of banking all began with trading goods and the promise of future returns as the basis of economic exchange. Ancient civilizations thrived on the barter system, a world where trading goods was the currency, and human interconnection formed the core of transactions. While this worked reasonably well for the earliest communities, as curiosity and ambition grew, so did the need to venture beyond local borders, seeking untapped markets and novel treasures—an early iteration of what we now call shopping around.
In these early times, the essence of banking lay not in grand buildings or digital databases, but in the communal knowledge and integrity upheld by merchants and local leaders. Temples were not just places of worship, they also served as the original brick-and-mortar bank used to safeguard assets and facilitate loans. And while they did not pay interest on deposits, they did charge interest on loans—a parallel to the modern-day banking experience many consumers face.
These practices set the stage for structured credit systems and financial instruments that would eventually shape the banking landscape that followed.
Transformative Trends & Innovations
Fast forward to the present day, and the evolution of banking has been nothing short of revolutionary. In our interconnected world, the essence of banking still revolves around the promise of future returns, though in a vastly different landscape.
Banking continues to experience a transformation largely driven by technological advancements that have redefined the way individuals and businesses shop, spend, and live. The modern-day consumer wields unprecedented power at their fingertips, effortlessly comparing financial products, seeking competitive rates, and exploring diverse offerings from various banks and financial institutions. The unavoidable shift to digital platforms has made it easier for individuals to shop around for the best-suited financial services, transcending geographical constraints and time limitations.
This unavoidable shift has elevated the need for fast, frictionless, and personalized experiences, further incentivizing banks to invest in solutions that streamline application processes, power data-driven instant approvals, and offer round-the-clock accessibility. The momentum of this trend is vividly highlighted in BAI’s Banking Strategies Executive Report noting that about 80% of banks are implementing new technologies, 73% are adding new processes and procedures, and 51% are working with vendors to improve and increase their engagement.
Embracing a Future of Innovation
As we honor International Day of Banks, let’s not only recognize the achievements of the past and present, but also look forward to a future where innovations continue to transform the financial landscape, making banking services more accessible, efficient, and inclusive for everyone.
With a legacy of serving banks for over 25 years, MeridianLink is here to help revolutionize your banking experiences with data-powered digital lending solutions to seamlessly support your customers through every stage of life.