Why do banks and stock exchanges close/have fixed hours? Banks and stock exchanges all around the world seem to adhere to quite a strict regime of 9-5, Monday - Friday, in the countries local time. 

This can have the effect of where an event that happens overnight, causes the market to open at an immediate dip as happened recently on Wall Street in response to economic data from China. 

The question is - in today's always-on, all connected world, why does this system still remain? I would have thought that for industry that is all about making money, they'd be the first to be always on.
The answer is simple and it is due to the conduct of business and conditions relating to the early days of exchanges and banks. Then, there was no interest in trading  or providing liquidity to companies 24 hours a day and there was no coordination with the other parts of the world. Today, it is more like preserving the tradition, and just look at how NYSE opens at every morning, the good old bell is there to kick start the business. Today, it may make sense to have 24/7 financial services provision as we are living in the age of internet. 

OTC FOREX trading is thriving 24/7. As long as there are willing traders/market makers to remain on the floor on different shifts during working hours.