What are the Features of Retail Banking?

16-Dec-2022

The services that a financial institution offers to its clients who are not financial institutions are referred to as retail banking. Retail banking does not include corporations, businesses, or other banks. Numerous personal finance products and services are available to individuals through retail banking. Let's study the features of retail banking and examine this branch of banking more closely.

Retail Banking In Brief

Individuals' personal financial requirements are met through retail banking. These services, which include withdrawals and daily deposits as well as account management, are tailored to each person's interests. These services are provided online or through nearby branches.

features of retail banking

Retail banks provide the general public with a broad range of services, including bank accounts, fixed deposits, credit and debit cards, loans, etc. People can effectively manage their funds with the use of these programs. Deposits and withdrawals can be made for retail banking services both online and in a bank location.

Individual customers now have it simpler to apply for house loans, personal loans, auto loans, open fixed and recurring deposits, transfer money, etc. thanks to online retail banking. However, there may be differences between banks in the selection of services and goods offered.

Features of Retail Banking

Transactions with Small Tickets

One of the primary features of retail banking is the small ticket size of transactions in this sector. Thus, depending on the policy and the bank's location, the loan ticket size for retail customers, for instance, will range from $1,000 to $100,000 or more, whereas for fixed deposits, the typical transaction size for deposits will be between $100 and $100,000.

Diversification

As far as the bank is concerned, the risk of the bank is diversified in the case of retail banking. For example, if a bank gives a big corporate loan of $500000 and the borrower defaults due to some issue, the bank is at risk of losing the entire amount of money. However, if the same bank gives $5000 loans to 100 different retail customers, and even if 5 or 10 borrowers default, the bank will be able to absorb the losses due to the diversified nature of retail banking.

Multiple Numbers of Branches

This is also one of the key features of retail banking. The retail banking system necessitates banks to open branches at various centers to attract customers because unlike investment banks or wholesale banks which require 2 or 3 branches only to cater to a small client base. But when it comes to retail banks, they are required to open a number of branches so as to serve their vast base of consumers adequately.

Numerous Services

Retail banking services are largely characterized by the availability of multiple services. Customers who use retail banks typically do so to meet multiple needs rather than just one, so unlike investment banks, which are only required to provide banking services related to investments, retail banks are required to offer all services, including the opening of savings and current accounts, the issuance of debit and credit cards to customers, the provision of housing loans, auto loans, personal loans, and other loans types, the sale of third-par automobiles, among other things.

Strong Competition

Owing to the fact that there are so many market players and clients who are price- and service-sensitive, retail banking also has the disadvantage of being extremely competitive. Therefore, for instance, if one bank offers a rate of interest on fixed deposits of 5% and another bank offers a rate of interest of 5.50%, the customer will switch to the bank offering the higher rate of interest on deposits. The same is true for loans, where customers quickly switch to other banks even when the difference in interest rates is just.10 or.20%.

Higher Administrative Costs and Expenses

A bank's administrative costs increase as the number of its branches increases because it must cover more operating costs for branch upkeep than an investment bank or wholesale bank does including rent for the branch's facilities, personnel salaries, and electricity costs.

Now that we have discussed the significant features of Retail banking, let us also learn about the types of banks that come under Retail banking.

Retail Banking: Types and Services

Large Bank: These are reputable banks with a presence across the country. Because of their reputation and range of services, retail customers trust these banks.
Community Bank: Community banks often operate in a more constrained geographic area and provide loans and depository services.
Online Bank: Digital-only goods and services are offered by online banks. You can use a computer or a mobile device to access your stuff.
Regional Rural Bank: These financial institutions were established in rural areas to meet the requirements of local residents. Most of these banks are found in Tier 2, Tier 3, and Tier 4 cities.
Post Office: Post Office offers various savings plans, including depository. Rural residents favor post office services because of the institution's long history of fostering public confidence.

Begin a Career in Retail Banking with Post Graduate Program In Retail Banking

Retail banking careers can be quite fulfilling. Many people start out as Tellers and progress through fascinating positions in the retail department. Personal bankers and branch managers are examples of employment in the retail industry where you can hone your customer service abilities into an art form. An ideal path toward this rewarding career would be a Post Graduate Program in Retail Banking.

Consider acquiring the skills to work as a Mortgage Manager or Assistant, Account Manager, and several other positions in the Retail Banking sector.

What does a Post Graduate Program in Retail Banking offer?

A Post Graduate Program in Retail banking is a comprehensive training program articulately designed to train prospective. The main objective of such Post-Graduate Program in Retail Banking is to guarantee efficient and skilled professionals in the banking industry.

Students would grasp banking as a core business function and the fundamentals of retail banking and its products after completing a Post Graduate Program in Retail Banking. Typically, a good course would emphasize various parts of banking, products, and services, Current Accounts Saving Accounts (CASA) acquisition, complaint resolution, customer services, and several other aspects of retail banking, to provide candidates the opportunity to understand the dynamic realities of financial inclusion.

A Post Graduate program in Retail Banking will offer you numerous chances and opportunities to put your excellent knowledge into practice. To become a well-known retail banker, you must first have a solid understanding of the market and the issues affecting it, as well as a solid economic and technical background and strong interpersonal skills. Hence a good Post Graduate Program in Retail banking is ideally the course to put you on track.