What it is:
How it works/Example:
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 it matters:
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.