What is Retail Banking?
Retail banking refers to the consumer-oriented services offered by commercial banks. These services include checking and savings accounts, mortgages and various types of loans and investment services relating to retirement and educational planning.
How Does Retail Banking Work?
Retail banking encompasses the services offered to consumers by commercial banks. The term 'retail' refers to the almost storefront-shopping nature of commercial banking services.
Most commercial banks have extensive retail banking services and products to reach a wide consumer base.
Here's a brief story about Bob's day at his bank XYZ. He arrives at the bank one day to deposit a $2000 paycheck into his account. He decides to deposit $1000 of the paycheck into his existing checking account. The other $1000 he decides to use to open a savings account. Bob sits with a bank representative who explains the various savings account options and helps him with opening an account once he's made a decision.
Additionally, the account representative informs Bob of retirement plans the bank offers as well as educational savings plans for his children. Before he leaves, Bob also takes information on auto loans offered by the bank since he is considering purchasing a new car. While at the bank, Bob was able, in one place, to deposit money, open a savings account and find information relating to banking products he may need in the future.
Why Does Retail Banking Matter?
Retail banking is a framework that allows commercial banks to offer banking products and services in one place at virtually any of their branch locations. The retail banking aspect turns commercial banks into a kind of 'store' (or retailer) where clients are able to purchase multiple banking products.