How Did Medieval Banking Work Without Modern Conveniences?
Banking during the Middle Ages and Renaissance was a risky business
Today, people can take out their phones, click a small button and unlock access to the entire modern banking system. People can pay their bills, open a credit card, secure a mortgage, order a car, see their balances, transfer their balances, and a whole lot more with just a few keystrokes. This can be done from a subway car, from a restaurant, or hiking in the woods. Banking has become easier than ever and that begs a question.
How did Medieval banks do it? How did the earliest banks function without the conveniences that we enjoy today? Surprisingly, the answer is much like they do it today.
Banking Obstacles In The Medieval World
The Medieval period and the early Renaissance provided a slew of challenges for bankers trying to turn a profit. Communication was slow. People did not carry identification. Charging interest was illegal. War and changing politics upended the landscape with alarming regularity. The results turned banking into an extremely risky business. Many Medieval banks outright failed and many of them failed quickly.
The banks that didn’t fail quickly became household names. Medici. Bank of St. George. Gran Tavola. That is because in order to make it as a banker during this period you had to be truly extraordinary.
In order to overcome the large number of obstacles bankers had to resort to clever and shady business practices to skirt the laws and prevent fraud.
One of the most lucrative ways to make money as a Medieval bank was through discretionary deposits. These accounts shielded high-profile people and organizations from scrutiny. A bank would agree to accept a large deposit from certain individuals in return for absolute discretion. The bank would not disclose any information about the accounts or the owners to anyone. In return, the people making the deposits would agree to pay the bank a percentage of the sum in return for the service.
Discretionary deposits were often used to hide money from tax collectors or move money for…