Retail and commercial banking are two sides of the same coin that provide different customer bases with banking services and products. Although most banking institutions have both a retail and a commercial division, retail banks serve retail customers while commercial banks serve corporate and business customers. It\u2019s crucial to understand the distinctions between retail and commercial banking services. In this article, we define retail banking, discuss its salary, and provide an overview of retail banking vs. commercial banking, summarizing the services they provide and discussing similarities and differences between the two banking services.<\/p>
Retail banking, also known as consumer banking or personal banking, is banking that provides financial services to individuals rather than businesses. Retail banking allows individual consumers to manage their money, obtain credit, and deposit funds securely. Checking and savings accounts, mortgages, personal loans, credit cards, and certificates of deposit are just a few of the services provided by retail banks.<\/p>
Retail banks handle financial needs for everyday spending and life events like home purchases. Retail banks offer the following products and services:<\/p>
Checking, savings, and money market accounts are examples. Checking accounts frequently include debit cards for making purchases. They allow you to pay your bills online or electronically. Savings and money market accounts provide higher interest rates than checking accounts, but they often have withdrawal and transfer limits.<\/p>
They give higher interest rates than savings accounts, but you must usually keep your money untouched for at least many months to avoid early withdrawal penalties.<\/p>
These cards are similar to debit cards in that they allow you to purchase items now and pay for them later. They indicate a loan that must be repaid. If you do not pay the full amount listed on your statement within the grace period, you will be charged finance charges based on the card\u2019s annual percentage rate (APR).<\/p>
These are storage areas where tiny valuables and essential documents are kept so they cannot be stolen or damaged in your home.<\/p>
These items assist customers in purchasing or refinancing a home. Second mortgages allow consumers to borrow money against an already mortgaged property by utilizing the equity in their home as collateral.<\/p>
Any purpose can be served by these goods. You are not required to pledge collateral. Revolving lines of credit (including credit cards) allow borrowers to spend and repay frequently without asking for a new loan each time they need to access funds.<\/p>
Not all banks provide all of these services. Before opening an account, go over a bank\u2019s website or speak with a representative regarding its service offerings.<\/p>
Personal banking services are the main focus of retail banks. Serving businesses is the main focus of commercial banks. They may provide many of the same alternatives, but in a size that is appropriate for commercial purposes. Both commercial and retail banking services are offered by several institutions.<\/p>
A retail bank stores its retail clients\u2019 cash deposits. It then uses these deposits to make loans to other clients. Previously, the Federal Reserve mandated all banks to maintain 10% of their demand and check deposits in-house overnight; this requirement was reduced to 0% in March 2020. This is referred to as the reserve requirement, and it is seen as a safety and liquidity safeguard. This means that the remaining deposits may be lent out. Banks charge greater interest rates on these loans than they do on consumer deposits, which is how banks make money.<\/p>
The Federal Deposit Insurance Corporation (FDIC) insures bank deposits for consumers in the banking industry. As of March 31, 2021, the FDIC insured 4,978 institutions, including commercial banks and savings banks. The entire amount of assets insured by the FDIC was $22.6 trillion, and the total amount of loans insured was $10.86 trillion.<\/p>
Retail banks range from small, locally owned community banks to the retail banking services of huge, worldwide corporate banks like JPMorgan Chase and Citibank.
The top five largest commercial banks in the United States by assets as of March 31, 2021, were:<\/p>
All of these banks provide retail banking services, which account for a significant amount of their revenue. Credit unions are a sort of retail bank that functions as a non-profit cooperative in which members pool their assets to provide loans and other financial services to other members. Credit unions often offer cheaper interest rates to their members because they are not-for-profit corporations and do not have to pay corporate taxes on any gains.<\/p>
While retail banking services are available to the general public, corporate banking services are exclusively available to small and large businesses. Commercial banking vs. retail banking both provide products and services to different types of customers. While the services they provide are fairly similar, the scope of their services is tailored to their customer’s demands.<\/p>
Corporate banks offer the following services to businesses:<\/p>
Several corporate banks also include investment banking divisions that provide services to their corporate clients, including asset management and securities underwriting.<\/p>
Retail banking and commercial banking share several similarities:<\/p>
Here are some distinctions between the two:<\/p>
The average annual salary for a Retail Banker in the United States as of March 23, 2023, is $29,652. In case you need a quick salary calculation, that comes out to about $14.26 per hour. This equates to $570 every week or $2,471 per month.<\/p>
While ZipRecruiter reports yearly wages as high as $38,500 and as low as $22,000, the bulk of Retail Banker salaries in the United States now ranges from $25,000 ((the 5th percentile) to $34,500 (75th percentile), with the highest earners (90th percentile) getting $38,000. The average salary range for a Retail Banker varies significantly (by up to $9,500), suggesting that there may be numerous prospects for growth and increased pay dependent on skill level, region, and years of experience.<\/p>
The Retail Banker employment market in Atlanta, GA, and the surrounding area is quite active, according to recent job posts on ZipRecruiter. Your area\u2019s average yearly salary for a Retail Banker is $29,355, which is $297 (1%) less than the national average salary of $29,652. Georgia ranks 49th out of 50 states in terms of compensation for Retail Bankers.<\/p>
Banks are expanding their product offerings to offer a broader range of services to their retail customers. Banks are adding teams of financial advisers with expanded product offerings, including wealth management, brokerage accounts, private banking, and retirement planning, in addition to conventional retail banking accounts and client support from financial representatives at local branch locations.<\/p>
Online banking has broadened retail banking options in the twenty-first century. Several banks now offer online services to consumers only over the Internet and mobile applications, reducing the number of times a customer must visit a local office to conduct business.<\/p>
In addition to traditional banks providing online services, several new fintech companies have emerged, providing similar services with more simplicity and, in many cases, at lower pricing, because they do not bear the overhead of traditional brick-and-mortar bank branches. N26, Monzo, and Chime are examples of these banks.<\/p>
Retail banks\u2019 consumer banking services make it easier for people to manage their accounts, notwithstanding the price. It is feasible to live without a bank account, but it will be more challenging. Without retail banks, you might spend more time on financial tasks. One-time transactions may incur higher fees.<\/p>
There are other types of banks than retail banks. In truth, you must rely on other sorts of banks for some services because retail banks do not provide them.<\/p>
Several banks operate in multiple markets. Retail banks, commercial banks, and investment banks all exist simultaneously. You may be able to open a business account at the same retail bank where you already have a personal account.<\/p>
Whereas corporate banking is a branch of the banking sector that deals with corporate clients, retail banking is the segment of a bank that deals directly with retail consumers. With bank branches in almost every major city, retail banking is the public\u2019s first impression of banking.<\/p>
Retail bankers are frequently referred to as customer service representatives or personal bankers due to the role\u2019s customer-focused aspects. They work for high-street banks, where they provide financial advice to customers, recommend appropriate products and services, and help them with banking needs.<\/p>
Lenders evaluate your loan application based on the 5 Cs: Capacity, Capital, Collateral, Conditions, and Character.<\/p>
Retail banks provide their customers with a wide range of products and services. People typically picture retail banks when they think about banks. There are bank branches in every city in the country that provide banking services to the general people. Checking and savings accounts, mortgages, personal loans, credit cards, and certificates of deposit are among the most popular services provided by retail banks (CDs).<\/p>