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A look at the features and types of retail banking entities
Most banks worldwide offer a gamut of services encompassing the various needs of their customers. Today, you can invest in various market securities, open pension accounts, get investment advisory services, etc. However, one aspect of banking sticks to providing traditional banking facilities and is known as retail banking. Let us understand the various features and functions of retail banking in this article.
Retail banking is the branch of banking that concentrates on offering elementary financial services to its customer base. Also referred to as personal or consumer banking, it is designed for individual customers rather than large organisations or institutions. Essentially, retail banking gives you access to the necessary provisions to manage your money through bank accounts.
Retail banking connects individuals to the financial system by managing money, credit, and transactions. Banks mobilise customer deposits to provide loans, facilitate payments through digital channels and cards, and offer guidance for financial planning. Services like savings accounts also provide interest income, with high savings account interest rates helping customers grow their funds while meeting everyday banking needs.
A retail bank is one that provides everyday banking services. Typically, it includes the following.
You can open Savings, Current, Salary accounts. Each account is further categorised into various types. For instance, a Savings Account can be a regular or premium account designed for women, children, or senior citizens, with broadly similar benefits.
Retail banking services also include provisions to open fixed and recurring deposits. Fixed deposits are primarily of two types – cumulative and non-cumulative, whereas recurring deposits allow you to park a fixed sum of money each month and create savings with discipline.
Bank cards are an essential feature of retail banking services. Your bank generally gives you an ATM-cum-debit card to aid cash withdrawal and online and PoS payments. You can also apply for credit cards based on your account usage.
A loan is yet another retail banking provision you enjoy. You can increase your chances of getting approvals for various kinds of loans – home loans, personal loans, and automobile loans if you have an existing relationship with a retail bank.
Retailing banking institutions are broadly classified into two types:
Credit unions are smaller, non-profit organisations. They charge lower interest rates and provide higher return rates on savings account deposits. As non-profit organisations, credit unions do not have the physical presence of large banks and primarily sell their products and services online.
Commercial banks are for-profit financial institutions that offer a wide range of banking services to the public. They earn revenue primarily through interest rate spreads on loans and deposits, as well as transaction fees. These banks are easily accessible and cater to individuals, businesses, and large corporations.
Co-operative banks, also called community banks, operate on a smaller, local scale and are structured as cooperative societies. They are owned and managed by their members, often serving specific communities, professions, or regions. While they provide banking services similar to commercial banks, their focus is on supporting local economic activity rather than maximizing profits.
Online and digital banks operate mainly through internet and mobile platforms, offering banking services without physical branches. They enable instant account opening, 24/7 transactions, and paperless processes. Revenue comes from digital transactions, lending, and service fees, often lower than traditional banks. For example, users can manage accounts, transfer funds, and pay bills seamlessly through the DBS digibank app.
Retail banking in India focuses on providing financial services directly to individual customers, whereas commercial banking serves both individuals and businesses with a wider range of financial solutions. Understanding the distinction helps customers choose the right banking services for their needs.
Feature
Commercial Banking
Retail Banking
Target Customers
Businesses, corporations, and individuals
Individual customers and households
Services Offered
Loans for businesses, trade finance, deposits, treasury services
Savings accounts, personal loans, credit cards, fixed deposits, recurring deposits
Purpose
Profit generation from large-scale financial activities
Meeting personal financial needs and everyday banking requirements
Scale
Large, often national or international presence
Local or regional focus, primarily serving individual clients
Revenue Model
Interest on corporate loans, investment income, transaction fees
Interest on personal loans, account fees, transaction charges
There is no doubt that all of us need retail banking services in our daily lives. Retail banks are the stepping stones that pave the path for creating savings and building wealth. DBS Bank is an excellent retail banking example. As a DBS Bank customer, you can enjoy a bouquet of retail banking services. We also offer an array of investment facilities to help you reach your various time-bound financial goals.
Open a new savings account with DBS Bank in just a few minutes and start managing your money with ease today.
*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.
An example of retail banking is the range of services offered to individual customers, such as savings accounts, personal loans, credit cards, and fixed deposits. These services are designed to manage everyday financial needs.
Retail banking is used by individual customers who want to manage their personal finances. For instance, anyone opening a savings account online can access deposits, withdrawals, and other basic banking services conveniently through digital platforms.
Retail banking products include:
