Retail Banking

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What is 'Retail Banking'

Retail banking, also known as consumer banking, is the typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs). In retail banking, the focus is on the individual consumer.

BREAKING DOWN 'Retail Banking'

Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of individual retail clients. Consumers expect a range of basic services from retail banks, such as checking accounts, savings accounts, personal loans, lines of credit, mortgages, debit cards, credit cards and CDs. Most consumers utilize local branch banking services, which provide onsite customer service for all of a retail customer's banking needs. Through local branch locations, financial representatives provide customer service and financial advice. Financial representatives are also the lead contact for underwriting applications related to credit-approved products.

Expanded Services in Retail Banking

Banks are adding to their product offerings to provide a greater range of services for their retail clients. In addition to basic retail banking accounts and customer service from local branch financial representatives, banks are also adding teams of financial advisors with broadened product offerings, with investment services such as wealth management, brokerage accounts, private banking and retirement planning. Some of these ancillary services are also offered through outsourced third-party affiliations. All of the expanded offerings allow for increased convenience through greater connectivity of accounts, which helps customers to access funds and make personal transactions more quickly and easily.

Internet Finance and Retail Banking

In the 21st century, a movement towards internet finance banking operations has also broadly expanded the offerings for retail banking customers. Several online banks now provide banking services to customers purely through internet and mobile applications. These banks offer nearly all of the accounts and services provided by traditional banks, often with lower fees from reduced banking branch expenses. Examples of these banks include Simple, Moven and GoBank.

U.S. Banking Landscape Profile

In 2015, the top five largest U.S. commercial banks held over half of the industry's customer deposits. As of 2015, the top five largest commercial banks are JPMorgan, Bank of America, Wells Fargo, Citibank and U.S. Bank. In the banking industry, consumers also rely on the Federal Deposit Insurance Corporation (FDIC) to insure their bank deposits. As a leading U.S. government entity, the FDIC was responsible for insuring deposits at 6,638 banking institutions in 2014.

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