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Universal Banking

Written By
Paul Tracy
Updated January 16, 2021

What is Universal Banking?

Universal banking refers to the practice of offering clients retail banking as well as investment services.

How Does Universal Banking Work?

Investment services and retail banking services (savings and checking accounts, loans, mortgages, etc.) have customarily been housed in separate banking institutions: investment banks and retail banks, respectively. Commonly practiced by European banks, Universal banking brings retail and investment services together in the same bank for client convenience and higher revenues

To illustrate, suppose bank XYZ offers universal banking services. Current clients who hold only a checking or savings account can also learn about and take advantage of investment services should they wish to open their own investment portfolio. XYZ's combined retail and investment banking services allow its clients to fulfill all of their banking needs in the same place.

Why Does Universal Banking Matter?

Universal banking benefits both banks and their clients. The integration of retail and investment services benefits banks by providing them with more ways to generate revenue, while it benefits clients by providing them with the convenience of accessing a full range of banking services from a single provider presumably trust.

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