Banking facilitates the transfer of wealth in an economy. In its most simple form, rather than having someone carry around all their money, they keep it in a bank. When they need that money, they write a check or use a debit card. This ensures a safe transfer of money from one person to another.
In the United States, we have a dual banking system, meaning that we have banks that are chartered nationally in addition to banks that function under a state charter and regulations.
Nationally chartered banks are noted by the word "federal" or the initials "N.A." in their name and can have a branch anywhere in the country.
State banks are more limited. While they can have customers from anywhere, they cannot have out-of-state branches. Whereas national banks tend to take advantage of economies of scale, state banks tend to focus more on customer service in their geographic area.
There are also different types of banking. Check out our latest infographic to learn more.