Why are there so many different types of banks? - I

Not all banks are exactly the same. There are commercial banks, savings banks, savings and loan associations (S&Ls), cooperative banks, and credit unions. Today they offer many of the same services, but at one time, they were very different from one another. Commercial banks originally concentrated on meeting the needs of businesses. 

They served as places where a business could safely deposit its funds or borrow money when necessary. Many commercial banks also made loans and offered accounts to individuals, but they put most of their effort into serving business (commercial) customers. Savings banks, S&Ls, cooperative banks, and credit unions are classified as thrift institutions or “thrifts,” rather than banks. Originally, they concentrated on serving people whose banking needs were ignored or unmet by commercial banks. 

The first savings banks were founded in the early 1800s to give blue-collar workers, clerks, and domestic workers a secure place to save for a “rainy day.” They were started by publicspirited citizens who wanted to encourage efforts at saving among people who did not earn much money. 

Savings and loan associations and cooperative banks were established during the 1800s to help factory workers and other wage earners become homeowners. S&Ls accepted savings deposits and used the money to make loans to home buyers. Most of the loans went to people who did not make enough money to be welcome at traditional banks.