If you’re considering a career in banking, you may have come across the term “retail banking.” So, what does it entail? Retail banking focuses on delivering financial products and services to individuals like you and me rather than large companies or banks. It involves handling personal finances and offering various services and products tailored to our needs. Let’s delve into retail banking, its benefits, different types, and services. Keep reading to learn more!
What is Retail Banking?
Retail banking, also called personal banking, gives money services to regular people, not businesses. Retail banking allows customers to securely handle their money, borrow, and deposit funds. Commercial banks are also called retail banks in the United States, and investment banks can only invest in the market.
Back in the 1990s, commercial banks handled big corporations’ money matters. But now, things have changed. Today, commercial banks serve large businesses, while retail banks cater to the everyday banking needs of individuals, including deposits and loans.
How Retail Banking Works?
Retail banks offer everyday services to individuals, including bank accounts, fixed deposits, credit and debit cards, loans, and more. These services play a necessary role in helping people handle their finances. Simple banking tasks like depositing or withdrawing money can be done online or by visiting a branch bank.
Online banking allows people to access services like home loans, personal loans, car loans, or saving money with fixed deposits. You can also transfer money online. Just keep in mind that different banks may provide different services.
Types of Retail Banks
Different types of retail banks can be distinguished based on their characteristics and services. Here are several categories:
Major Bank
Established nationwide banks that earn consumer trust through their widespread presence and diverse services.
Community Bank
Operates in smaller geographic areas, concentrating on providing loans and depository services.
Online Bank
Offers exclusively digital services accessible through computers or mobile devices.
Regional Rural Bank
Established in rural areas to address the financial needs of residents in Tier 2, Tier 3, and Tier 4 cities.
Post Office
Provides depository services and savings schemes, especially favored by rural residents due to the institution’s longstanding trust.
Retail Bank Services and Products
Retail banks extend services and products to cater to your financial requirements. Here are some examples:
Account Opening
Retail banking gives options such as checking, savings, and retirement accounts. Some banks also offer zero-balance savings accounts without a minimum balance requirement.
Deposits
Fixed deposit (FD) or recurring deposit (RD) accounts through retail banking can be initiated. Risk-averse investors favor FDs for assured returns and higher interest rates than savings accounts. Non-resident Indians (NRIs) can also go for NRE, NRO, or FCNR accounts.
Loans
Retail banking covers different kinds of loans, including home, personal, two-wheeler, auto, and more. You can explore the Navi app if you need a home loan or instant personal loan with an entirely paperless process.
Cards
Debit cards and credit cards are the most commonly provided cards by retail banks in India. In addition to these, you can find prepaid cards, no-cost-EMI cards, and more.
Investment and Insurance
Retail banks also present various investment options such as mutual funds, NPS, and similar avenues. Some retail banks extend their services to insurance, allowing you to purchase general health insurance policies.
Other Services
Retail banks offer a diverse range of services, including money transfers, checking account balances, issuing checkbooks, setting up auto-debit or standing instructions for EMI payments, card upgrade requests, utility bill payments, bancassurance, safe deposit lockers, demat accounts, demand drafts, and more.
Advantages of Retail Banking
The advantages of retail banking include:
- Receive tailored assistance through dedicated relationship managers.
- Access various financial products and services covering deposits and loans.
- Benefit from guaranteed returns on deposits, particularly with Fixed Deposits (FDs).
- Utilise innovative banking products with ease of access via online banking.
- You can select from many banks and Non-Banking Financial Companies (NBFCs).
- You can access personal finance solutions from any location at any time.
Retail banking provides various products and services for everyday customers. Whether you need a loan, want to open an account, get a credit card, set up auto-debit for purchases, or invest towards your financial goals, retail banks offer these services. Each retail bank has its app, available for download, allowing you to conveniently access all banking services and products at your fingertips.
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