What exactly is meant by banking or the banking business?
Banking for private customers and business customers
Banking in the area of mortgage financing
Banking in the area of investments
Which banking for short-term, medium-term and long-term financial goals?
Balanced financial portfolio through good banking
Banking in the context of securities transactions
Payment transaction business as a central area of modern banking
Credit transactions as a variant of banking
In English usage, the term banking refers to any form of banking business or any other transactions carried out with the involvement of a bank or savings bank. A special form is online banking via internet-enabled devices, which can be used by both private and commercial bank customers through an account provided specifically for that purpose.
Furthermore, banking is differentiated with regard to investments, current account transactions, loans, building savings and mortgage financing as well as with regard to temporal aspects and securities.
What exactly is meant by banking or the banking business?
As already mentioned, banking simply means the indirect or direct banking business as such. A distinction is made between securities transactions, current account transactions, loans and investments, banking transactions with regard to temporal aspects, electronic banking and other banking transactions not further defined.
In addition, further differentiation can be made within the respective main categories, so that the lending business, which is also referred to as loans or investments, can for example be divided into cash loans, acceptance credits, discount transactions and guarantee transactions.
Securities transactions, on the other hand, can be divided into custody account transactions, investment transactions, issuance transactions and financial commission transactions.
What is online banking?
Online banking is indeed a form of banking, but it is also an umbrella term that is commonly used as a synonym for electronic banking, home banking and e-banking. It simply refers to electronic banking transactions that can be carried out from a private laptop, PC or mobile devices. To authorize a transfer, transaction numbers are generated by a TAN generator or taken from a TAN list. Access and the processing of banking transactions take place via data lines, and it is also possible to use a mobile phone or smartphone. For mobile online banking, banks or savings banks often provide an app nowadays. With the help of this digital solution it is possible to view account statements on the go, make transfers via the TÜV-certified PushTAN procedure, view messages in the mailbox and manage the entire account.
Banking for private customers and business customers
The banking business or banking for private customers essentially includes current account transactions as well as lending transactions, securities transactions and investments. Banking transactions with regard to temporal aspects play a rather minor role here, as these mainly occur in the form of commodity futures in the commercial or business sector.
In contrast, private insurance and building savings products can also be important within private banking. Private pension concepts to ensure financial security in old age, in case of illness, or in the event of the main earner’s death are also relevant.
Business customers’ banking transactions, on the other hand, differ significantly from private customers’ banking transactions in essential respects. In the commercial sector, insolvency protection programs, various other guarantee programs, as well as loans and investments play a major role.
Credit transactions, commodity futures as well as banking transactions with regard to temporal aspects are also important here. A large area of business customers’ banking also includes real estate and the takeover of companies.
Banking in the area of mortgage financing
The area of mortgage financing is primarily relevant for private bank customers, so it can be seen here almost exclusively as part of private banking. Mortgage financing is divided into the actual financing and the area of building savings, which can also be a component of retirement provision. This also includes the use of so-called capital-forming benefits, as granted in some industries.
Banking in the area of investments
Banking in the area of investments is roughly as extensive as with regard to lending transactions, whereby a distinction should be made between short-term, medium-term and long-term investments. This area is relevant for both private and business customers.
Those who are more interested in securities transactions and real estate are also in the right place here, because these two sectors also belong to investments. Other forms of this business area include current account transactions and individual pension programs.
Which banking for short-term, medium-term and long-term financial goals?
For short-term financial goals and investments, savings books, overnight money and fixed-term deposits as well as short-term time deposits — which can also be fixed-term deposits — are particularly important. Short-term investments serve on the one hand as a silent reserve and on the other hand as a springboard to the next savings goal, the medium-term investments, provided the financial cushion is not needed for short-term bottlenecks. This form of banking is therefore an important component of each person’s personal protection.
Banking for medium-term financial and savings goals, on the other hand, comprises investments that are placed for about 3 to a maximum of 10 years. This represents an important milestone within private protection as well as the financial security of companies and is the intermediate stage to long-term investment as a financial reserve and security or as retirement provision.
Promising projects here are various funds but also classic savings projects in the form of fixed-term deposits or building savings projects in the private sector. Long-term savings goals can be realized in different ways, depending on how risk-aware an investor wants to be.
Notable and sensible investments include investing in securities or buying and renting out real estate. With the appropriate financial basis, participation in companies or real estate can also make sense. For small amounts that are to be invested for the long term, various fund offers from the house bank are suitable.
Balanced financial portfolio through good banking
In principle, it is always possible through well-applied banking to create and maintain a balanced financial portfolio, which is just as important today in the private sector as in the commercial sector.
It is worthwhile to combine a balanced mix of short-term, medium-term and long-term investments with sensible use of loans on favorable, if possible individually negotiated, terms.
Banking in the context of securities transactions
In the context of securities transactions, banking can mean both the classic way of working with a broker and the use of modern communication channels and working with an online broker. It does not matter whether the broker appears in person or only gives virtual recommendations to their clients.
Payment transaction business as a central area of modern banking
Another important area of banking is the so-called payment transaction business via a current account. Both incoming and outgoing payments as well as the use of agreed overdraft facilities must be taken into account.
This area is important in both the private customer sector and the business customer sector, whereby in the business sector there is often the possibility to negotiate individual terms for tolerated and agreed overdrafts.
Credit transactions as a variant of banking
One form of banking is also credit transactions, which are divided into discount transactions and guarantee transactions, but also into cash loans and acceptance credits.
Short-term as well as medium-term and long-term loans are relevant here, with long-term loans playing a major role especially in company financing and real estate financing. The assumption of guarantees and warranties is also significant here and is a form of guarantee business.