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.

Understanding 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.

Key Takeaways

  • Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).
  • The focus is on the customer.
  • Retail banking aims to be the one-stop-shop for as many financial services as possible on behalf of individual retail clients.

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.

Outsourced third-party affiliations also offer ancillary services. 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.

Real-World Example of Retail Banking

In the 21st century, a movement toward 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 the 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 2018, the top five largest U.S. commercial banks held over half of the industry's customer deposits. As of 2018, the top five largest commercial banks were:

  • JPMorgan
  • Bank of America
  • Wells Fargo
  • Citibank
  • Goldman Sachs

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 ensuring deposits at 5,670 banking institutions at the end of 2017.