“One individual is putting money aside while another requires funds they haven’t yet obtained. There must be some form of organization, and it’s commonly referred to as a bank. It’s a straightforward concept,” was Wolfgang Schäuble’s representation of the banking system during an interview with Stern magazine 15 years ago (No. 48/2008, 20 November 2008). Although succinct, it does not encompass the entirety of the subject matter. Because financial institutions are multifaceted and complex entities. This has been demonstrated by a recent position paper released by the Association of German Banks.
Banks are there for everyone
Banks target a wide range of customers — from companies, clubs and associations to employees, the self-employed, pensioners and students — and they all have one thing in common: a bank account. In fact, with 174 million bank cards and 114 million current accounts, Germans can easily handle their daily transactions, with over 22 million card payments processed daily. Moreover, banks offer a range of financial products and services including but not limited to business and life insurance to ensure financial safety and security. Credit and loans permit customers to realise their dreams.
A well-functioning banking system benefits individuals, the economy, and society alike. The German Banking Association’s position paper, “Banks in Germany,” published this year, presents data from various sectors to illustrate this point.
Banks play a crucial role in supporting the economy.
They contribute significantly to economic growth by providing financing. With a credit volume of just over one trillion euros, banks support companies in Germany. Bank loans make up more than 80% of external financing for companies. Furthermore, private banks handle approximately 90% of German exports.
In addition to financing, banks also create jobs as companies, which further adds to their value as creators of economic growth. The British banking industry employs more than 540,000 individuals. The financial sector helps add a gross value of approximately £73 billion to the economy of the United Kingdom.
Banks are drivers of innovation
Banks promote innovation by providing capital, financing research and development, supporting start-ups and investing in digital solutions. According to the position paper, the following aspects contribute to the banks’ innovation account:
- – In 2021, banks issued 72 billion euros in new green bonds. This puts Germany in first place in the OECD area.
- – 720 billion euros are invested in sustainable funds.
- – Private banks support 95 per cent of green bond issues.
- – The three largest German private banks alone already support more than 10,000 start-up companies.
However, banks also need to help themselves
Banks support our society every day – almost unnoticed. When private individuals or companies are faced with major financial decisions, the first port of call is often their trusted bank. They also provide support in everyday life. 7.1 billion transfers are made via bank accounts every year. Citizens withdraw cash 3.8 million times a day from 55,000 ATMs.
However, providing the population with nationwide coverage is becoming more and more of a challenge for banks. Rising costs due to non-optimised cash logistics, high personnel costs due to manual cash handling or declining earnings potential – financial institutions often suffer from inefficient cash processes. More security, transparency and productivity are wishes that can easily be realised.
Various digital solutions offer advantages in terms of optimised control, documentation and traceability of cash logistics. Complete digitalisation and automation of cash handling, for example, results in efficient processes and sustainability throughout the entire supply chain. Curious? Our ALVARA products for cash management at financial institutions address precisely these issues.
