Retail banking refers to that division of a bank which deals directly with retail customers. The term ‘retail’ is used owing to its almost storefront shopping nature of commercial banking services and products. It is also popularly known as consumer banking or personal banking. Retail banking is the evident features of banking sector or industry to the general public or the common man. Customer deposits garnered by retail banking represent an extremely important source of funding for most banks.
Retail banking caters an array of useful financial products; a few of them are here:
1. Savings accounts
Retail financial institutions provide savings accounts. They pay an interest on them but generally cannot have checks written on them. Retail banking also provides checking accounts to its customers for which they have to usually pay a monthly fee.
2. Mortgages
Mortgage also known as mortgage loans are used in property transactions. They account for a substantial part of retail banking profits, as well as the prevalent portion of an XYZ bank’s exposure to its retail clientele.
3. Personal Loans
These banks offer loans for personal loans to their consumers for various things like buying a car or a property or an educational loan for their children.
4. Debit and Credit Cards
They offer their bank’s debit cards or credit cards to their consumers for shopping and purchase of goods. They usually offer lucrative schemes for card holders and attractive gifts on crossing a limit of certain amount.
5. Certificates of Deposits (CD’s)
These are a popular investment product and are certificates which entitle the bearer to receive interest. They also act as important source of funds for bank since the funds in the CD’s are available to the banks for a definite period of time.
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