Banks can take deposits, and while all depository institutions can – no one else can, at least not in the United States. One of the ways that taking deposits can provide additional is that a bank has the power to grant customers access to credit and certainty of payment perspective. One bank service that’s been around for a long time is the ability to issue a letter or statement of credit. Once a client has deposited funds and needs to make a payment, a bank may issue a letter of credit or a statement to say to the person or business being paid that they’ll get paid. Everyone knows this for certainty because these funds are being held at the bank and are available to make payments. That is a valuable service! As a bank, if you look at different industries, whether that be agriculture, manufacturing, or other industries, there are little niches where it’s very valuable to be able to say to a customer, “Yes, these funds are available.” And then to say to a third party, “Yes, these funds are available.” And to be able to say, “Yes, these funds can be set aside and payment to you is guaranteed.” That’s a valuable service. Nobody else can do that because they aren’t holding the funds. You see this come up in existing services, but it might be under-exploited. It’s a valuable service that could have more applications.
Banking services continue to advance as technology continues to change the way people bank and purchase. Banking services continue to advance as technology continues to change the way people bank and purchase. Brent Farley is the managing member of Farley Law, PLLC
Farley Law, PLLC helps business owners identify business and legal strategies they can use to protect business and personal assets, increase and keep more income, and increase peace of mind regarding the way their business operates. Have a question or a comment? Send us a note at business@farleylawpllc.com, or set up an introductory call using our bookings service.