Retail banking, also known as consumer banking or personal banking, refers to the provision of banking services to individual consumers. Retail banks offer a wide range of financial products and services, including deposit accounts, loans, mortgages, credit cards, and other financial services.
The main objective of retail banking is to provide financial services to individuals and small businesses. The retail banking sector is highly competitive, with numerous players ranging from large multinational banks to smaller local banks and credit unions. Banks in the retail banking sector typically have a large branch network and offer a range of products and services through digital channels as well.
Here are some of the common services offered under retail banking
Savings accounts: Retail banks offer savings accounts for individuals to deposit and withdraw money easily. The accounts may come with various features such as ATM cards, online banking, mobile banking, and overdraft facilities.
Checking accounts: Checking accounts allow customers to make transactions such as bill payments, online shopping, and ATM withdrawals, and deposit paychecks. Customers may have the option to choose between paper checks or digital checks.
Loans: Retail banks offer personal loans, car loans, and home loans to individuals. The interest rates and terms vary depending on the type of loan.
Credit cards: Credit cards provide customers with a line of credit, which can be used to make purchases or withdraw cash. Retail banks offer credit cards with various features such as reward points, cashback, and discounts.
Insurance: Retail banks may offer insurance products such as life insurance, health insurance, and car insurance.
Investment services: Retail banks may offer investment products such as mutual funds, stocks, and bonds.
Money transfer: Retail banks allow customers to transfer money domestically and internationally. Banks may also offer services such as wire transfers, online money transfers, and mobile money transfers.
Foreign currency exchange: Retail banks offer foreign currency exchange services, allowing customers to convert one currency to another.
Safe deposit boxes: Retail banks offer safe deposit boxes to customers for storing valuable items such as jewelry, documents, and cash.
Retail Banking at Present
The banking industry has undergone significant change in the last ten years. Banks have been forced to adopt new strategies and techniques as a result of increased competition, the IT revolution, the emergence of Fintech and non-financial services, and changing customer demographics and expectations.
Banks are embracing digital transformation, which provides a better customer experience, lower operating costs, and lower fees for banking transactions. Meanwhile, internet banking and mobile banking are the two most rapidly emerging retail banking trends. Banking has become more simple and convenient as a result of technological advancement. This trend is expected to result in a significant decrease in bank visits in the coming years.
Retail banks typically earn revenue from interest and fees charged on their products and services. They also earn revenue from investment and insurance products, as well as from various fees, such as overdraft fees and ATM fees.
Overall, retail banking is a critical part of the global financial system, providing individuals and small businesses with the necessary financial services to manage their finances and achieve their financial goals.