Banks look after money for people who want to save, and lend money to people who want to borrow. Other financial institutions can also do this.
New Zealand’s first banks were set up in the 1840s. Some banks from the 1800s survived into the 2000s, such as the Bank of New Zealand. There were quite strict laws that set out what banks and other financial institutions could do.
Changes from the 1980s
In the 1980s there were law changes that meant banks and other financial institutions needed to be more competitive. Many banks merged and were bought by overseas companies. By the 2000s most banks in New Zealand were Australian-owned.
As well as lending and borrowing, banks allow people to pay for things using non-cash methods such as:
- EFTPOS (electronic funds transfer at point of sale)
- credit cards
- direct credit and direct debit.
Banks and finance companies make their money by charging higher interest on money they lend than the interest they pay on money they borrow. They also charge fees for some services.
Working in banks
Before the 1980s the structure of each bank branch was quite rigid. The manager made the big decisions. Few women worked in banks, and those who did had little opportunity for promotion.
During the 1980s technology changed, the head offices of banks became more important and call centres handled many customer inquiries. As more transactions were carried out electronically, rather than in person, many branches closed.