Everything you need to know about retail banking

SmartAsset: what is retail banking?

Retail banking involves providing individuals and sometimes small businesses with financial services such as checking and savings accounts, credit cards, auto loans, mortgages, insurance, and investments. Retail banking includes credit unions and small community banks as well as the retail banking operations of large commercial banks. Some financial service providers such as savings and loans offer a limited set of retail banking services.

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Fundamentals of Retail Banking

Detail banks are the first and most important entry points to the financial services industry for the typical consumer. When an individual opens a checking or savings account, applies for a credit card, or takes out a loan to buy an automobile or a mortgage to buy a house, it is usually done at a retail bank. Retail banks are also called consumer banks or personal banks.

Retail banking functions may also be performed by financial service providers that are not called banks. credit unionsfor example, are non-profit cooperatives that operate as retail banks for many individual banking consumers. Some large non-bank financial institutions, such as hedge funds, also offer retail banking-type services such as checking accounts and savings accounts.

Retail banks are just one of many types of banks. Commercial banks, many of which have retail banking branches, provide banking services to businesses and other institutions. Central banks manage a country’s money supply, set interest rate and supervising retail and commercial banks.

Retail banking services can be provided face-to-face at physical branches, through a smartphone app, online through the website, or over the phone. Many banks offer all or most of these services. Online-only retail banks are a relatively recent addition to the retail banking ranks and their numbers are growing as consumers embrace on line access to retail banking.

Retail banking

Retail banks offer a wide variety of financial services to their individual customers. These can usually include:

Not all retail banks offer all services, and some banks offer others, such as agricultural loans. The major commercial and investment banks provide their corporate and institutional clients with non-retail services such as access to capital markets through debt and equity offerings.

Retail banking regulators

SmartAsset: what is retail banking?

SmartAsset: what is retail banking?

In the United States, financial institutions serving as retail banks may be regulated by a number of different government supervisors. A patchwork of different federal and state entities review the lending and deposit activities of banks to ensure compliance with applicable regulations and laws. Regulators can also investigate consumer complaints.

Other government agencies provide insurance to protect depositors against financial loss in the event of bank failure. These agencies charge banks for insurance premiums and also screen banks to check their financial soundness.

  • Office of the Comptroller of the Currency (OCC): The OCC regulates national banks and federal savings associations.

  • National Credit Union Administration (NCUA): The NCUA oversees federally chartered credit unions.

  • Federal Reserve Board: The Federal Reserve oversees state-chartered banks that belong to the Federal Reserve System.

  • Federal Deposit Insurance Corporation (FDIC): The FDIC insures deposits at banks and federal savings associations.

  • State regulators: Each state has its own regulatory apparatus to ensure the safety and soundness of its state-chartered banks and to protect consumers.

How Retail Banks Make Money

Retail banks generate revenue primarily through costs and interest rate differentials. Fees include monthly fees for checking and savings accounts, annual credit card fees, late fees and transfer fees. The interest rate spread is the difference between the interest rate they pay on deposits and the interest rate they receive on loans. Many banks also make a lot of money from invest money that is deposited in the bank with them. They keep enough in hand for withdrawals and earn a return on the rest.

The essential

SmartAsset: what is retail banking?

SmartAsset: what is retail banking?

Retail banking provides individuals with access to financial services, including checking and savings accounts, loans and mortgages, credit cards, Insurance and investment management. Retail banks, also called consumer banks or personal banks, also serve small businesses. Retail banks include small community banks, retail banking branches of large commercial banks, and credit unions. Retail banking customers access it through brick-and-mortar branches, smartphone apps, websites, and the phone.

Banking advice

  • A retail bank can meet many of your financial needs, but for information and advice, a financial advisor may be your best bet. It shouldn’t be difficult to contact a financial advisor. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your advisors at no cost to decide which one is best for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.

  • . SmartAsset has researched literally hundreds of banks ranging from multinational institutions to small local savings and loans and made the reviews available online for free. Smart Assets Bank notices include brief overviews with discussions of service quality and financial health as well as the pros and cons of each bank’s offerings. Reviews also provide details of products, fees and interest rates paid on deposits.

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