Retail banking is banking that provides direct services to consumers. Many people with bank accounts have their accounts at a retail bank and banks that offer retail services may also have merchant and commercial branches that work with businesses. For people with high net worth and special banking needs, private banking services may be pursued. These offer a high level of service with a number of options that are not available to average members of the public.
The most basic retail banking services include savings and checking accounts. Most retail banks, however, try to make themselves into a one stop shop for banking customers to increase customer retention and loyalty, ensuring that the bank has a steady supply of customers. Expanding banking services also provides more opportunities for the bank to turn a profit.
Other services can include safe deposit boxes, home and car loans, certificates of deposit, retirement accounts, and investment services. Most retail banks provide customers with debit and credit cards, as well as financing options like home equity lines of credit. Depending on banking regulations, a bank may not be able to offer all of these services at one location, but it can partner with other financial institutions to provide conveniently linked services for bank customers. This type of banking is designed to provide people with banking services for life, from college funds opened at the birth of a child to retirement trusts established to pay for old age.
Retail banking is a highly competitive market. Many people need these services, and they are not afraid to shop around to find the bank offering the best incentives, rates, and deals. Banks can compete with interest rates, account perks such as credit monitoring, and other services designed to entice customers. Some even provide special incentives for customers switching over from rivals, such as bonuses awarded when transferring funds from a rival bank to open a new account.
Some retail banks are international corporations with many branch banks all over the world, while others operate on a national level. Smaller retail banks may be regional or may even have single branches. Community banks may offer services customized to local members and sometimes receive government incentives for community reinvestment, such as offering small business loans and home loans to people in the community. It is sometimes possible to get more favorable interest rates on such activities from community banks than it is from larger establishments.