depositors

Depositors are individuals or organizations that place funds into banks or other financial institutions by opening deposit accounts such as checking, savings, or term deposits. They provide funding to the institution and typically earn interest or other benefits. Depositors differ from borrowers, who take funds from a bank.

Deposits serve as a major source of bank funding and underpin payment settlement and liquidity in the financial system. They can be demand deposits, which are withdrawable on demand (such as checking accounts), or time deposits, which are held for a fixed period and often pay higher interest (such as certificates of deposit). Retail depositors are individuals; institutional depositors include corporations, pension funds, and other organizations. The composition of a bank’s deposits influences liquidity risk, funding costs, and profitability.

Most jurisdictions provide deposit protection through government-backed schemes that insure a portion of deposits if a bank fails. Examples include the United States’ Federal Deposit Insurance Corporation and the United Kingdom’s Financial Services Compensation Scheme. Coverage levels vary by country and account type; insured deposits are typically prioritized in partially insolvent institutions.

Depositors have a stake in the stability of the banking system and are affected by monetary policy and interest rates. In periods of stress, insured deposits tend to remain stable, while uninsured deposits can be more vulnerable. The rise of digital banking has broadened access to deposit products, though the core principle remains: depositors entrust funds to a financial institution in exchange for safe storage, access to payments, and potential earnings.