What is Retail Banking? Definition of Retail Banking, Retail Banking Meaning and Concept

Retail banking is one dedicated to establishing operations with individual savers and investors and small and medium-sized companies.

Retail, commercial or retail banking is the best known banking in society. This type of bank is the most widespread and well-known among citizens. In general, retail banks carry out basic financing and savings capture operations. However, in recent years it has undergone a major reconversion to offer all kinds of complex products to the entire population.

Types of retail banking

We can divide retail banking into:

  • Private banking : financial advice, investment funds, etc.
  • Banking of individuals : sight accounts, deposits, receipts and payroll, mortgages, credits, etc.

In addition to the foregoing, retail banking has in recent years introduced a progressive channeling of wholesale or corporate banking products. The objective of this is that small savers could access these products. Products such as investment, bonds, corporate debt, mortgage bonds, loans, among others. With this, the bank sought to improve its profitability and, in addition, obtain financing from a market that until then was forbidden due to its low volume of assets.

In more recent times, commercial banks operating electronically within an online framework have proliferated. This has happened thanks to the development of electronic banking and the rapid spread of Internet networks in all corners of the world.

The evolution of retail banking

Initially, retail banking was dedicated to receiving money from agents with economic surplus (individuals or small institutions) in exchange for the payment of interest, to lend it with interest to other agents with financial needs. In the bank, it tried to attract savers with basic products such as deposits, while its financing operations went through consumer loans, mortgages and business financing, through savings accounts and payment of bills.

Over time, these savings and financing products have taken on a more complex position, dedicating products that were usually offered to large wealth and capital to small and medium savers and SMEs.

Generally, retail banking has been available to consumers through bank offices and branches, through which intermediation took place, however, with the expansion and modernization of new technologies, online banking has been a revolution in the access and immediacy of consumers towards their products, and in a substitution of the physical place in transactions towards telematic means.