Banking systems have emerged so advanced nowadays that certain areas which are required to be given the utmost protection are given through various means, majorly through online means, as it is more safe and secure and the data of the individuals are safely equipped with themselves with less security issues. Likewise, holding up accounts and understanding different banking terms becomes important for individuals to further know the actions that a app performs. Security and safeness especially with respect to money are very hard issues to address first, for which various services are provided by the banks to their customers, likewise retail banking and consumer banking are two platforms that are provided to the customers with additional facilities to keep their money safe in their accounts.
Retail Banking vs Consumer Banking
The type of banking service required depends on the person or the organization. Retail Banking serves the people with branches located across different places. It does not cater to any business needs. It is also known as private banking. In comparison, consumer banking serves individuals and businesses. It provides loans and investment services to businesses.
Difference Between Retail Banking and Consumer Banking in Tabular Form
|Basis of Comparison||Retail Banking||Consumer Banking|
|Definition||It provides services to its retail customers.||It provides services to its retail customers and businesses.|
|Services||The main focus of Retail banking is deposit and withdrawal.||The main focus of Retail banking is credit cards, NEFT, etc.|
|Other Name||The other name for Retail banking is Private Banking.||The other name for consumer banking is Personal Banking.|
|Type Of Customers||Customers of a Retail bank are usually high-net-worth individuals.||Customers in consumer banking are traditionally people with standard savings accounts.|
What is Retail Banking?
Retail banking started in the 1920s, but it was not successful because banks during that time were not protected by laws and regulations. It created a big problem in the stock market that caused investors to lose their money. Investors were not aware that their savings were used as investments by the bank, and when things went wrong, there was no way to get their money back. The 10 years of Great Depression happened due to the stock market crash, collapse of global trades, and banks neglectful acts. To solve the problem of the bank’s mishaps, Franklin D. Roosevelt made an insurance corporation, known as the Federal Deposit Insurance Corporation to protect the money of investors in the bank. It provides comfort that their money is well protected by law and has a guarantee of safety.
Retail Banking is also known by the name of private banking. By its name, it means that it also serves high-net-worth individuals and manages their accounts. This banking offers services like Saving Accounts, RD accounts, ATM cards, etc.
As we know there are hundreds and thousands of businesses, be it small or big carried out all over the country. Every time a business earns a profit they have its first motive to submit the same in a safer place, which is why these systems come into picture, ideally it’s a tendency that providing additional services attracts more customers, so to provide an effective implementation of these services and banking techniques, people submits and enjoys the rendered services. The term “retail banking” refers to mass-market banking geared toward the general people.
Local banks and large-scale corporate banks that provide services worldwide are examples of retail banks. Online and mobile banks have become increasingly popular as a result of technological advancements, and they provide the same services in a digital format.
Retail banking offers a huge range of products and services, which include:
- Savings Account
- Deposit certificates (CDs)
- Credit cards
- Currency Exchange and Remittance Services
What is Consumer Banking?
It is also known by the name of personal banking. The following services are provided to consumers: internet banking, debit card, credit card, NEFT, etc. The main function is to provide credit to consumers.
Services Rendered By Consumer Banking
This is a distinct feature of consumer banking. We all know that businesses require funds for different types of activities. This is provided as part of consumer banking. Various types of financial loans or credit options are provided to customers.
Treasury Managing Services
This is a type of financial asset management. Here, businesses can be helped through cash and investments.
Difference Between Retail Banking and Consumer Banking in Points
- The customer range of retail banking includes high-net-worth individuals, whereas that of consumer banking includes regular people, businesses, etc.
- The main focus of Retail banking is deposit and withdrawal, whereas that of consumer banking is loans, credit cards, etc.
- Retail banking serves through branches, whereas consumer banking serves through branches, online and mobile channels.
- Retail Banking provides services to individuals whereas, Consumer Banking provides services to individuals and businesses.
Retail and consumer financial institutions are inextricably interconnected because of who they serve. Companies rely on consumers to purchase the products and services successfully, while customers rely on companies to meet the demand and/or solve a problem that cannot be simply solved by a person. Businesses and customers rely on one another to thrive, which means that retail banks and corporate banks, in theory, rely on one another to function properly.