The history of banks goes back a long way and it’s hard to wonder how banks became such an integral part of our lives from then to now. There’s a lot more to the story of banking than ledgers and vaults. One thing is for sure: the history of banking has involved dramatic innovation, ingenuity, and maybe even a little frustration.
Like them or not, banks have always played a dramatic role in civilization. Follow me on this quick timeline of some of the coolest facts in the history of banking!
Amazing Facts About the History of Banking
- Banking Is Older Than You Think
- The Word ‘Bank’ Comes From a Bench
- Medieval Banks Were Surprisingly Global
- The First Paper Money Came from China
- Central Banks Were Created to Fund Wars
- There Was a Time When Your Bank Could Just… Disappear
- ATM Machines Were First Inspired by Candy Dispensers
- Digital Banking Is Evolving Faster Than Ever
1. Banking Is Older Than You Think
The earliest “banks” existed in ancient Mesopotamia over 4,000 years ago. Temples and palaces served as financial institutions where people deposited grain or cattle and extended loans in the form of silver or some other commodity. It wasn’t just generosity – interest was charged back then.
So yes, people borrowed and paid interest before the pyramids were built.
2. The Word ‘Bank’ Comes From a Bench
The term bank derives from the Italian word banco, meaning bench. In Renaissance Italy, moneylenders and merchants did business from benches in open market places. When one of these men ran out of money or failed to pay their debts, they had their bench physically broken – banca rotta – hence the term bankrupt.
3. Medieval Banks Were Surprisingly Global
By the 13th century, Italian banking families like the Medici built networks that spanned Europe, used double-entry bookkeeping, and used coded letters to move money from city to city – an early version of SWIFT. With so much power, these families were like the tech billionaires of their time. Instead of apps, however, they built cathedrals and appeased the Pope.
4. The First Paper Money Came from China
At a time when the West still depended on coins, China was already issuing paper money by the Tang Dynasty in the seventh century. When Marco Polo got around to visiting in the thirteenth century, he was stunned to see the Mongol emperor Kublai Khan using paper money backed by the State – and it actually worked!
Yes – long before credit cards, etc. – ancient China figured out the power of fiat currency.
5. Central Banks Were Created to Fund Wars
The Bank of England, which came into being in 1694 wasn’t created to help the average Brit with opening a savings account. It was established to fund a war against France. Governments noted they can borrow when they have a central bank. It affords them a way to borrow money quickly and manage inflation.
So ironically, some of the institutions now tasked with economic stability were born out of chaos.
6. There Was a Time When Your Bank Could Just… Disappear
Many banks opened and closed very quickly in the 19th century, especially in the U.S. This time period, from 1837 to 1863, was called the “Free Banking” period. Anyone with enough capital could start a bank and make their own currency notes.
People used to carry notes from many different banks, always worried the bank might close before they could exchange the notes for real money. There was no FDIC or guarantee—just trust and hope.
7. ATM Machines Were First Inspired by Candy Dispensers
The concept of the ATM as we know it began with Scottish inventor John Shepherd Barron in the 1960s, allegedly based on the idea of a chocolate dispensing vending machine. He thought “If I can get a candy bar out of a machine, why not cash?”
Fast forward to today, and there are over 3 million ATMs around the world, all thanks to a sweet tooth.
8. Digital Banking Is Evolving Faster Than Ever
In the last two decades the banking system has changed more than it has in the last two hundred years. We have seen mobile banking apps , digital wallets, cryptocurrency , and intelligent platforms with artificial intelligence to help with investment decisions. The future of money may not include cash at all.
What started long ago as temples storing grain ,has now come to a simple tap on your phone to send money across the world in merely seconds.
Final Thought: From Temples to Touchscreens
The history of banking is very old, interesting and sometimes surprising. As the society changed, banking also changed-starting from temples and handwritten notes, today we expect instant money transfer and 24/7 customer service. When we understand this journey, we realize that money is not just numbers. This is a part of the journey of trust, technology, and human civilization.
Who would have thought that banking could be so interesting?