Both retail banking and consumer banking are services of a bank provided to their customers with some additional facilities for their customers to keep their money safe in banks. These banks give services to individuals with high income, low income, businesses, institutions, etc. Both are almost similar, but they do have some differences.
Retail Banking vs Consumer Banking
The main difference between retail banking and consumer banking is that in retail banking, the customers that enjoy the facilities of retail banking are retail customers from the retail industry, and on the other hand, in consumer banking, facilities of consumer banking are enjoyed by common individuals, the general public, business, institutions, NGOs, etc.
Retail banking is also known as private banking, where people of high net worth and income have the facilities of making their account in them. Retail banking also provides Facilities to big institutions and high net worth companies for expanding their business through loans and shares. A variety of wide-ranging services are offered to customers in retail banking.
Consumer banking is also known as personal banking, where people having a commonwealth and salary have the facilities of making an account in such banks. Such banking is made available for common people with minimum income only as their savings. They do not provide loans for businesses etc., as their services.
Comparison Table Between Retail Banking and Consumer Banking
| Parameters of Comparison | Retail Banking | Consumer Banking |
| Meaning | It helps in providing services and products to its retailing customers relating to increasing their business. | It is a financial institution that provided Facilities and services to customers having a minimum income. |
| Services provided | They provide services such as ATM, having an RD account, access to business loans, etc. | They provide services related to giving debit and credit cards and access to NEFT banking. |
| Other name | The other name for Retail banking is Private Banking. | The other name for consumer banking is Personal Banking. |
| Customer type | Customers of a Retail bank are usually people with a high net-worth | Customers in consumer banking are usually people with a normal saving account. |
| Main function | They help in the improvement and liquidity of the money of an individual or an entity. | They help their customers to get loans and other card and online banking facilities. |
What is Retail Banking?
Retail banking is also known as private banking, where people of high net worth and income have the facilities of making their account in them. Retail banking also provides Facilities to big institutions and high net worth companies for expanding their business through loans and shares. A variety of wide-ranged services are offered to the customers in retail banking.
Retail banking offers facilities such as access to an ATM card, mobile banking, RD account, etc. Retail banking is often said to be a form of commercial banking that focuses on giving services to its customers. A financial service that is provided by a bank to its customers is known as retail banking.
Local people prefer retail banking more as they are more into business. Hence, retail banking is very efficient for their growth in their business of local people. Retail banks help in increasing the liquidity and money supply. They also help in making a recurring deposit account. Having an account under a retail bank may also reduce the interest rate of a loan.
What is Consumer Banking?
Consumer banking is also known as personal banking, where people having a commonwealth and salary have the facilities of making an account in such banks. Such banking is made available for common people with minimum income only as their savings. They do not provide loans for businesses etc., as their services.
In consumer banking, the banks provide facilities such as access to internet banking, debit card, initiating a credit card balance, access to a feature of NEFT, etc. Consumer banking is essential for the common people since it provides features that are not available through retail banking. Commercial and financial banking are two types of consumer banking.
The main function that is performed in consumer banking is that they provide facilities on credit to a consumer banking customer. This type of banking is only open for people who want common banking benefits for their savings through monthly incomes. Those are retired persons, adults, working students, etc.
Main Differences Between Retail Banking and Consumer Banking
- Retail banking is a financial institution that provides services to its customers related to retailing, and on the other hand, Consumer banking is a financial institution that provided Facilities and services to customers who are individuals having a normal income.
- Retail banking provides services such as access to ATM, business loans, access to mobile banking, and creation of RD account, and on the other hand, consumer banking provide services such as giving a debit or credit card, internet banking, NEFT banking, etc.
- The other name for retail banking is private banking, and on the other hand, the other name for consumer banking is personal banking.
- Customers in retail banking include individuals of high net worth, institutions, businesses, etc., and on the other hand, customers in consumer banking include individuals with a normal savings account, retired individuals, students, etc.
- The main function that is performed by a retail bank is that they improve the supply and liquidity of money for increasing the business of their customers, and on the other hand, the main function performed by a consumer bank is that it helps in providing loans on credit basis for their customers.
Conclusion
Both retail banking and consumer banking are services of a bank provided to their customers with some additional facilities for their customers to keep their money safe in banks. These banks give services to individuals with high income, low income, businesses, institutions, etc. Both are almost similar, but they do have some differences.
A person wanting to create a bank account in a bank must be aware of the differences between retail and consumer banking. Even though they have their similarities, their differences lie in the functions they perform, on the facilities and products they provide to their customers. A common man should have basic knowledge of these two banking systems.
References
- https://www.sciencedirect.com/science/article/pii/S0378720601000970
- https://onlinelibrary.wiley.com/doi/abs/10.1002/cb.46