Retail banking, also known as consumer banking or personal banking, is the provision of services by a
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
to the
general public, rather than to companies, corporations or other banks, which are often described as
wholesale banking (corporate banking).
Banking services which are regarded as retail include provision of
savings
Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an ...
and
transactional accounts,
mortgages
A mortgage loan or simply mortgage (), in civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pur ...
,
personal loans,
debit card
A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either ...
s, and
credit cards. Retail banking is also distinguished from
investment banking
Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by und ...
or
commercial banking. It may also refer to a division or department of a bank which deals with individual customers.
In the U.S., the term ''
commercial bank
A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit.
It can also refer to a bank or a division of a larger bank that deals with whol ...
'' is used for a ''normal'' bank to distinguish it from an
investment bank. After the
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
, the
Glass–Steagall Act restricted normal banks to banking activities, and investment banks to
capital market
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers ...
activities. That distinction was repealed in the 1990s. Commercial bank can also refer to a bank or a division of a bank that deals mostly with deposits and loans from corporations or large businesses, as opposed to individual members of the public (retail banking).
Products
Typical banking services offered by retail banks include:
*
Transactional accounts
**
Checking accounts (
American English
American English, sometimes called United States English or U.S. English, is the set of variety (linguistics), varieties of the English language native to the United States. English is the Languages of the United States, most widely spoken lang ...
)
**
Current accounts (
British English
British English is the set of Variety (linguistics), varieties of the English language native to the United Kingdom, especially Great Britain. More narrowly, it can refer specifically to the English language in England, or, more broadly, to ...
)
*
Savings account
A savings account is a bank account at a retail banking, retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options and the inability to be overdrawn. Traditi ...
s
*
Debit card
A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either ...
s
*
ATM cards
*
Credit cards
*
Traveler's cheque
A traveller's cheque is a medium of exchange that can be used in place of the currency of a country. Each cheque is denominated in a preprinted fixed, round, amount of one of a number of major world currencies; it has two panels for a signat ...
s
*
Mortgage
A mortgage loan or simply mortgage (), in civil law (legal system), civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners t ...
s
*
Home equity loans
*
Personal loans
*
Certificates of deposit/
Term deposits
In some countries, such as the U.S., retail bank services also include more specialised accounts, such as:
*
Sweep account
A sweep account is an account set up at a bank or other financial institution where the funds are automatically managed between a primary cash account and secondary investment accounts.
Function
A sweep account combines two or more accounts ...
s
*
Money market accounts
*
Individual Retirement Account
An individual retirement account (IRA) in the United States is a form of pension provided by many financial institutions that provides tax advantages for retirement savings. It is a trust that holds investment assets purchased with a taxpayer's ...
s (IRA's)
Sub-types of retail banks
*
Community development bank are regulated banks that provide financial services and credit to underserved markets or populations.
*
Private banks manage the assets of
high-net-worth individuals.
*
Offshore bank
An offshore bank is a bank that is operated and regulated under international banking license (often called offshore license), which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to ...
s are banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
*
Savings banks accept
savings
Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an ...
deposits.
*
Postal savings banks are savings banks associated with national postal systems.
See also
*
Banking institution
*
References
* Tiwari, Rajnish and Buse, Stephan (2006)
The German Banking Sector: Competition, Consolidation and Contentment Hamburg University of Technology (TU Hamburg-Harburg)
* Brunner, A., Decressin, J. / Hardy, D. / Kudela, B. (2004): Germanys Three-Pillar Banking System – Cross-Country Perspectives in Europe, Occasional Paper, International Monetary Fund, Washington DC 2004.
{{DEFAULTSORT:Retail Banking
Banking
Scottish inventions
Service retailing