Certain sources date banking all the way back to ancient Mesopotamia, when temples, royal palaces, and some private residences acted as storage facilities for precious commodities like grain, the ownership of which could be transferred by written receipts. There are records of loans made by Babylonian temples dating back to 2000 BCE; temples were regarded exceptionally secure depositories since their contents were thought to be safeguarded from robbery because they were holy locations watched over by gods. Traders’ companies offered financial services related to the purchasing and selling of products in ancient times.
Many of these early “protobanks” dealt largely in currency and bullion, with money changing and the supply of foreign and domestic coin of the proper weight and quality accounting for a large portion of their activity. The emergence of institutions specialised in the depositing and lending of money, as well as the invention of generally spendable IOUs that may function in lieu of coins or other commodity moneys, did not result in the foundation of full-fledged banks until the Middle Ages. In Europe, so-called “merchant bankers” mirrored the growth of banking by offering to help merchants in making long-distance payments using bills of exchange rather than real currency for a fee. Many merchants traded globally, keeping assets at several sites along trade routes, which gave rise to the merchant banking industry. A merchant was willing to accept instructions to pay money to a named party through one of his agents elsewhere in exchange for a fee; the amount of the bill of exchange would be debited by his agent to the merchant banker’s account, who would also hope to profit from exchanging one currency against another. Because there was a risk of loss, any profit or gain was exempt from the mediaeval usury law. Furthermore, there were methods for hiding a loan by having foreign currency accessible at a distance but postponing payment so that the interest amount might be disguised as an exchange rate fluctuation.
The first genuine European banks, on the other hand, dealt in gold and silver coins and bullion rather than goods or bills of exchange, and they arose in response to the risks of storing and transporting precious metal moneys, as well as the poor quality of available coins, which created a demand for more reliable and uniform substitutes.
Dealers in foreign currency, or “money changers,” were among the first to provide rudimentary banking services in continental Europe, while money “scriveners” and goldsmiths performed a similar function in London. Money scriveners were notaries who found themselves in a good position to connect borrowers and lenders, while goldsmiths started their move to banking by keeping their clients’ money and jewels secure. Goldsmiths acquired and sorted coins for profit, as well as dealing in bullion and foreign currency. They were willing to offer a rate of interest to attract currency for sorting, and it was partly because of this that they finally started to outcompete money scriveners as deposit bankers.
We have now developed so much that we get to use electronic banking services Malaysia to carry out our daily activities. Can you even imagine standing in long queues just to pay bills?