What are the Different Types of Retail Banking?


Retail banking offers numerous services for the advantage of the clients or customers allowing them for a better lifestyle and living quality. Retail banking has been largely used as it not only benefits customers solely, but its services impact the nation's economy as a whole. Let us discuss the varied types of retail banking in this post. 

The Different Types of Retail Banking

Commercial Banking

The first kind of Retail banking is Commercial banking which provides a diverse range of consumer banking services, including the following:

  • Certificates of Deposit (CDs)

  • Checking and savings accounts

  • Credit

  • Debit cards

Commercial banks are ideally meant for "profit organizations" that gain from transaction costs and interest rate spreads. The gap between the interest rates banks charge on loans and the rates they pay on deposit accounts is known as the interest rate spread. Throughout numerous economic cycles, the dispersion greatly varies. When the economy is expanding quickly, the dispersion is frequently wider. These organizations can make more money because of the increased dispersion. However, in difficult economic times, banks may need to reduce loan interest rates to encourage consumer spending. Their profit margins are consequently reduced.

Types of Retail Banking

Customers may hold more money in their savings accounts if higher interest rates are offered. The nature of offering high-interest rates attracts more customers and induces them in keeping more money in their accounts. Consequently, this strategy may in effect give less consumer involvement in the capital markets. A sizeable portion of the income of a commercial bank comes through transaction fees.  The fees may include credit cards/ debit cards recurring charges, fees for transfers, and other financial transactions and services. Commercial banks effectively control the market which enables them to charge premium fees without experiencing excessive shrinking of demand.

Cooperatives and Credit Unions

Credit unions are also among the types of retail banking (or similar cooperative institutions). They offer services, much like commercial banks, though frequently on a smaller scale. In credit unions, which are non-profit institutions, investors are the institution's stockholders. As a result, credit unions are under less pressure to turn a profit. In other words, businesses frequently offer increased rates on deposit accounts while collecting lower rates for loans. Credit unions are also fairly modest because they do not see transaction fees as a source of income. They are frequently viewed as services that can be offered at a low cost.

Savings and Loan Associations

These are another variant of Retail banking that focuses on mortgages. With specialization in Property and residential mortgages for clients along with basic banking services, they offer good services to the customers. They assist their clients in upgrading their homes or procuring vehicles etc. Under these variants come the Postal serving banks which make it easy for poor people to have access to convenient and safe money-saving opportunities.

Those are the types of retail banking, each operating and providing a varied range of services. While Retail banking is a good choice in terms of career,  if you are interested in a career switch, you may as well sign up for an ideal course such as  PG Program in investment banking to undergo career transition. 

Why PG Program in Investment Banking

Many banking professionals have made a switch from Retail banking to investment banking given the growing demand and benefits. A PG Program in Investment Banking is an ideal course of study for those interested in a career transition to Investment Banking.

A PG Program in Investment is ideally curated and designed with the goal to give professionals the necessary training and knowledge of handling numerous aspects of Investment banking duties and tasks. 

Fundraising for clients is the main purpose of investment banking. The two main methods for doing this are through issuing the company's shares and debt. When a firm wishes to issue bonds, it engages an investment bank to assist with bond structuring as well as to access its extensive network of possible investors. Similar principles apply when selling shares or equity to raise money. Investment bankers are the first to be contacted when a firm makes an Initial Public Offering (IPO) to offer stock to the general public. Determining the IPO price is another .duty of investment bankers.

As an aspiring Investment Banker enrolling in a well-formulated PG in Investment Banking from a reputed institution will provide you with higher chances of landing a job. The program's intent is to provide aspirants with the fundamental theoretical as well as practical skills required to have a smooth career growth or transition.  A PG Program in Investment banking will essentially prepare you for Investment banker roles and allow you to make informed and efficient decisions concerning mergers and acquisitions,  bond trading, initial public offerings (IPOs),  portfolio advisory services, valuation, and other areas.

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