To most people, banking means different kinds of bank accounts, such as – savings accounts, current accounts, etc. Well, that's just one part of it.
There are different kinds of banking, e.g., corporate banking, investment banking, retail banking, etc.
This article focuses on the difference between banking and retail banking.
6 Main differences between banking and retail banking
Although there are several kinds of banking available, you will see that retail banking is one single arrangement. And all the other banking comes under one umbrella. That's just one difference.
Check the following points to identify more differences.
Client categories
Retail banking is for mass people, whereas other kinds of banking involve the financial tasks of government and small and big businesses.
That means retail banking is usually aimed at general people rather than the government and other businesses.
Clientele range
For retail banking services, banks have a huge client base. That's because it's for mass people, and we are large in number, right?
Other banking services have comparatively selective clients. These services will mainly be made for small/large businesses, corporations, and the government. So, these are naturally lesser in number.
Nature of service
Retail banking is for every individual. On the other hand, the other banking service is customized according to the client's needs.
In addition, retail banking service deals with the general public. And other banking services are developed to serve businesses, corporate firms, and the government.
Processing cost
Retail banking has a low processing cost, so the service is available to general citizens. In comparison to that, the remaining types of banking cost higher than retail banking.
Transaction value
In retail banking, there is a lower value for transactions. But when it comes to businesses and government—one needs to pay higher for transactions.
Limitation of transections
As an individual in retail banking, you can perform a lesser amount of money transactions. Well, it's less only when you compare it with the other kinds of banking. That means you can transact more money in corporate or investment banking.
Sources of income
A bank charges you in retail banking. So, that's the way bank makes money in retail banking. On the flip side, the other types of banking generate income upon capital transactions.
Banking and retail banking: Differences in services
We have pointed out to you the key characteristic of two types of banking. Now we will identify the services you will get in banking and retail banking. That way, you will discover more differences in banking services.
Retail banking services
Banks serve their clients in retail banking via establishing local branches. Also, there are facilities for mobile banking services.
The following services are generally offered in retail banking.
• Sending money to another account
• Paying bills
• Receiving a salary
• Taking loans
• Uses of debit/credit cards
• Making money deposits
• Invest money for the future
• ATM services
• Money orders
• Wire transfers
• Banking for students
Rest of the banking services
Let's take a look at the other category of banking services: corporate and investment banking. These banks help businesses to expand. That will afterward aid in the growth of the economy.
For small to large companies, these banking services are essential. And corporate banks frequently employ relationship management to continue a positive relationship with their clients so that they can increase their business.
These banks are specifically developed to assist the clientele in handling their money. The amount of money is typically enormous, and the transaction is complex.
To aid in their customers' financial success, these banks offer a range of services, such as—
• Debt or equity issuance
• Underwriting security issued on behalf of a prospective company
• Help the companies in determining whether the trade is profitable or not
• Advise the institutions whether merging with a client
• Analyze companies and products for investment
• Term loans
• Line of credits
• E-banking
• Trade Finance
• International transactions
• Advisory services
• Cash management
• Underwriting of securities
Which banking is suitable for you?
We have mentioned all the differences between retail banking and other banking arrangements. Also, we have let you know about the service you can get in these banking.
So, if you are not running a business, corporation, or government organization, you can go for retail banking.
Final notes
Know that an economy relies heavily on a functional financial system. That's where the banks step in. They provide services to customers and businesses during good and bad economic times. Select the type of banking you require, and make sure the bank you choose is truly secure.