Last year we called for an impartial inquiry into the role of banking and the independent commission announced this week by the chancellor of the exchequer fits the bill in terms of remit and membership. Society needs banks but not the self-serving kind we have today. The commission has an opportunity to put this right. In doing so it will need to acknowledge banks' vital contribution and distinguish that from the clutter of other financial activities that banks have accrued and now encumbers the system. This is important work, for if the commission is successful it can help to solve society's riddle, “when is a bank not a bank?”

It is difficult to think of an industry that plays a more vital role in the global economy than banking. In taking surplus cash from people, businesses and governments and lending it to others, banks set the economic machine in motion and keep it running. Without this intermediation, money would not change hands, economic growth would stall and society would ossify, as inheritance replaced entrepreneurship as the principal means of wealth transfer.

Somehow, over the past quarter of a century, banks lost sight of their core mission. Encouraged by voracious shareholders seeking short-term gains and eased by deregulation and technology, the banking model became increasingly complex. Financial innovation changed from a tool to facilitate capital flows into a moneymaking technique for the bankers and their shareholders. Banks became unrecognisable conglomerates doing a myriad things that added little value to and often detracted from the socially useful activity that was at their core.