The ultimate guide to retail banking: Boost your financial well-being

In India, banks play a vital and integral role in the financial system. They have made a valuable contribution to India’s economic growth. For consumers as a whole, retail banking is one of the most essential elements of the commercial banking system. 

Retail banking is a concept that has been extremely helpful to developing nations like India. In today’s article, we will look into what retail banking is and everything you need to know about this innovative banking concept. 

Also read: The best banks in India: Leading the way in finance

What is retail banking?

Retail banking, also called personal banking or consumer banking, provides financial services to private individuals instead of businesses. With retail banking services, individuals may deposit funds, get credit, and keep track of their finances efficiently and securely.

The primary goal of retail banking systems is to provide customers with an array of banking solutions, including checking and savings accounts, account openings, mortgages, debit cards, and more. 

This method is intended for people in general and their financial requirements. It doesn’t include businesses, companies, or enterprises that would need more sophisticated financial solutions.

Retail banking example

Let’s say that you’re only entering a bank to make a deposit. You encounter a bank representative at the bank. The representative explains to you a few of the profitable investment plans that are out there. 

You are convinced and decide to put some money into the plan. The representative also informs you about a senior citizen FD programme at the same time. You open an FD account for your parent or any other relative because FD interest rates are higher than those of regular FD schemes. 

All of these services fall under the facilities offered by retail banks.

Also read:Explore the complex world of investment banks, one function at a time.

Types of retail banking

Large banks:

Sometimes referred to as banks in general, these banks provide a range of banking solutions. These banks have branches spread throughout the city.

Small banks:

These banks handle smaller deposits and run on a smaller scale. They are multi-location businesses offering nearly all the services that a large bank can offer.

Online banking:

Here, physical locations are non-existent, as the name suggests. But the whole point of online banks is to minimise fees.

Rural regional banks: 

RRBs also referred to as Gramin Banks, are regional banks that were set up in several Indian states to serve individuals with low incomes or those living in rural areas. These banks provide mortgages and financing in addition to regular retail banking solutions.

Private banks: 

These banks typically serve moderate-to-high-income demographics and are located in urban areas.

Post offices: 

The National Postal System provided opening accounts, deposits, recurring payments, and other basic banking amenities for those living in areas without access to traditional banks.

Also read: Deposit Vs. Deposit – Should you invest in FD or RD? 

Features of retail banking

Here are some characteristics that define retail banks:

Standardised services and products: Consumers may get standardised products and services from retail banks. Some of the options are savings, credit cards, loans, loans for houses, current accounts, and FD accounts.

Various distribution platforms: Retail banks use a variety of channels to provide their services to their customers. Some examples are local bank branches, websites, mobile apps, and so on.

Diverse customer categories: Small and medium-sized businesses, families, communities, and individual clients are all served by retail banks. In this way, retail banks provide their clients with the ability to handle their finances, deposit money for protection, or get credit as needed.

Advantages of retail banking

Retail banking offers the following benefits:

• Deposits in retail banking are reliable and core.
• Banks can obtain affordable funds from retail banking.
• The increased interest rates have little effect on retail banking. 
• The consumers of retail banks receive first-rate customer service.

Commercial banking vs retail banking 

Banks that cater to individual consumers are known as retail banks. This is where customers can access the bank’s services. Clients can avail of standard banking services from the bank. 

On the contrary, offering specialised services to specific clients is a part of commercial banking. These banks take deposits from customers and make them available for businesses to make investments in and profit from. 

Retail banking vs corporate banking

Retail banking serves consumers and small businesses. Financial products and services typically include savings and checking accounts, loans, and investment options. Retail banks provide support to customers through branches, digital platforms, and mobile applications.

Conversely, corporate banking provides financial services to large corporations. Treasury services include corporate loans, cash administration, and others. Corporate banks have a network of specialised departments that work together to provide clients with personalised solutions that meet their particular needs.

Conclusion

The banking sector has changed significantly over the last few years. There is a strong correlation between retail banking and the recovery of the economy. Retail banking improves the market’s ability to handle money by making low-interest loans available to consumers. 

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