Secondary Functions — General Utility Functions

A bank also offers a range of general utility services available to any customer as a facility, rather than as an agent acting on a specific customer instruction:

• Safe deposit lockers, for the safekeeping of customers' valuables, jewellery and important documents, for an annual rental fee.
• Issue of demand drafts, traveller's cheques and gift cards, letting customers remit or carry money safely without physically transporting cash.
• Letters of credit, particularly useful in foreign trade, where the bank guarantees payment to an exporter on the importer's behalf once the agreed shipping/trade documents are presented, reducing the risk for both parties in an international transaction.
• Underwriting of shares and debentures, where the bank agrees, for a commission, to subscribe to any part of a company's share/debenture issue that the public does not fully subscribe to, giving the issuing company an assurance that the full issue amount will be raised.
• Providing credit information about customers to other banks/businesses (with appropriate consent and confidentiality safeguards), useful when a business wants to assess a prospective customer's or supplier's creditworthiness.
• Merchant banking and advisory services, including advice on mergers, project financing and investment, particularly by larger commercial banks' specialised divisions.
• ATM and digital/mobile banking services, allowing customers to withdraw cash, check balances and transfer funds without visiting a branch — the modern extension of a bank's general utility role, built on the same underlying deposit/payment functions studied earlier in this chapter. …