Banking
This foundational industry operates by accepting customer cash deposits and leveraging that capital to issue loans to individuals and businesses, earning profit on the interest spread.
Why it exists
Banking exists to accept deposits, extend credit, facilitate payments, and intermediate between savers and borrowers.
Why it’s necessary
Without banks, economic activity would be severely constrained by lack of liquidity, inefficient capital distribution, and slow payments.
Key components
Deposit gathering
Consumer & commercial lending
Payments & transaction processing
Risk management & compliance
How to evaluate businesses
Net interest margin (NIM), loan growth, credit quality, deposit mix, efficiency ratio, and regulatory capital define performance. A great bank compounds book value safely across cycles.
How the industry could be improved
Real-time credit pricing, automated underwriting, better fraud detection via AI, simplified consumer interfaces, and faster settlement infrastructure that reduces systemic risk.