The banking industry is divided into two major banking components known as retail banking and corporate banking. Retail banking includes products and services which are offered to individual customers. Corporate banking services are those products and services that cater specifically to corporate customers such as large corporations and small businesses. Both these banking divisions offer products and services that are designed to meet their own individual groups of customers. The article offers a comprehensive explanation on the two types of banking and shows the main similarities and differences between retail and corporate banking.
Retail Banking
Retail banks offer their services directly to customers and individuals, instead of other banks and businesses. Retail banking services are obtained by individuals from commercial banks. The main services provided by a commercial bank include, accepting deposits, maintaining savings and checking accounts, and providing loans to individuals for a variety of purposes. Aside from these services many retail banks also strive to offer a variety of other services to individuals to maintain customer loyalty and customer retention. Other services that are provided as a part of retail banking include safety deposit facilities, retirement planning, wealth management services, private banking, etc. Certain retail banks may outsource investment services while some may connect these with the savings accounts and other banking products. Commercial banks are highly regulated by a number of government authorities which include the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). This regulation is important to protect the customers and their funds.
Corporate Banking
Corporate banking refers to the division in the banking industry that deals solely with businesses and firms. The corporate banking sector offers savings accounts, checking accounts, loan facilities, and credit facilities solely for companies and businesses. Corporate banking is the division of a commercial bank that only deals with corporate customers, and offers products and services that are tailored to meet the needs of corporate clients. The corporate banking industry offers loans, which may be secured or unsecured, and also could offer larger syndicated loans that may require the participation of a syndicate of banks. Other services that are offered include financial management, trade finance facilities, foreign exchange, custody, derivatives, etc. Corporate banking divisions also team up with investment banks to offer investment banking facilities such as IPO and underwriting services, securities trading, investment, and merger and acquisition services.
What is the difference between Retail Banking and Corporate Banking?
Retail banking and corporate banking services are offered mostly by commercial banks who maintain separate divisions for their retail customers and corporate clients. In some instances, commercial banks team up with investment banks to provide a number of investment banking capabilities to their business clients. Retail banking serves the needs of individual customers and includes services such as accepting deposits, maintaining savings and checking accounts, and providing loans to individuals for a variety of purposes. Corporate banking serves the needs of business customers and offers savings accounts, checking accounts, loan facilities, credit facilities, trade finance, foreign exchange, etc. solely for companies and businesses.
Summary:
Retail Banking vs Corporate Banking
• The banking industry is divided into two major banking components known as retail banking and corporate banking.
• Retail banks offer their services such as accepting deposits, maintaining savings and checking accounts, and providing loans directly to customers and individuals, instead of other banks and businesses.
• Corporate banking refers to the division in the banking industry that deals solely with businesses and firms and offers services such as savings accounts, checking accounts, loan facilities, credit facilities, trade finance, foreign exchange, etc.