Retail Banking Definition with Functions & Sub Types

Get a good idea of the retail banking definition and the different functions and subtypes that banks have today.

What is Retail Banking Definition

Retail banks definition covers the type of baking whereby a bank typically does nearly all transactions directly alongside a consumer. These banks offer basic financial services including credit cards, debit cards, personal loans, mortgages, and savings. This is a term commonly in use to distinguish the bank services from others such as wholesale banking, commercial banking and investment banking. There are cases where it will also refer to those divisions of banking which are dealing with the retail customers and hence, may also be termed personal banking.

Retail banks function similarly to commercial banks. They offer customers various products, including checking accounts, current accounts, ATM cards, credit cards, savings, and certificates of deposit. In addition, they authorize personal loans, home equity loans, car loans, mortgages, and other retail banking services.

Retail banks also offer individual customers retail banking services, such as savings accounts. You may also use them for services like asset management, credit cards, and mutual funds. These types of services assist individuals who require to handle their finances. Retail banks are at the forefront in providing these kinds of solutions for individuals. There are chances that an individual can achieve a very good outcome with the help of such financial institutions.

These banks are operating in a number of cities and neighbourhoods. Many people think of them as community banks, as there is generally easy access to their services in many communities. Read up more on the functions and sub types of such operations.

Functions of Retail Banks

Retail banks serve the financial needs of daily expenses as well as life events, like buying a house. Retail banks are focused on individual bank accounts and services. Commercial banks focus on serving businesses. They may offer many of the same options, but do so at a scale to meet business needs. Many banks offer commercial services as well as retail services.

Bank accounts: These include checking accounts, savings accounts, and money market accounts.

  • Checking accounts usually come with debit cards to make purchases. They provide an option for paying bills online or by electronic means.
  • Savings and money market accounts earn higher interest rates than checking accounts, but typically have limits on how frequently you can take out or move money out of them.
  • Credit cards: These are like debit cards, but allow you to buy things now and pay later. They are like loans that you are expected to repay.
  • Home Loans: These products help people purchase or refinance their homes.
  • Auto loans: These loans help people buy or refinance a vehicle.
  • Unsecured personal loans: These products can be used for just about anything. They do not require collateral to be put down.

Other functions of retail bankers include correspondent banking. All banks can or cannot offer all of these services. Review the banks website or ask a representative for their list of services before signing up for an account.

What is Retail Banking – Sub Types

Community Development Banks offer various loans as well as services for an underserved population or market. These are the types of banks which are supporting community development.

Private banks are those which are meant to handle assets of individuals of higher value.

Offshore banks are operating in these areas which have lower regulations as well as taxes. Many of the offshore banks are typically private banks offering financial services similar to commercial banks. These banks include large banks, often familiar household names. They usually have brick-and-mortar branches at bustling street corners.

Smaller institutions and community banks are also brick-and-mortar institutions offering retail banking services. Small banks typically have smaller U.S. deposits market shares than larger banks, but may have more locations. Community banks focus on providing consumer banking services to a specific region. They typically have a smaller amount of landmass.

Online banking does not have brick-and-mortar branches for consumers to physically visit, but they are another consumer-friendly option, particularly if minimizing fees is a goal.

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