what is retail banking? bank branches and retail banking with table
We explain that what is the difference between bank branches and retail banking with table. The history of the banking system dates back to the 15th century. The bank was initially an organization that helped people save the money they earned in a business.
Over time, the banking system revolutionized to such an extent that it plays a vital role in a country’s economy. The bank’s functionalities began to improve from time to time for the benefit of the people.
There are a variety of banks available in the world and together they are known as financial institutions. The functionality of a financial institution in simple words is any public or private organization that collects, invests and distributes funds.
In simpler terms, banks are the bridge between people who save money and people who want to borrow money. The interest paid to people who stay is part of the attention the bank receives from the people it has provided.
There are central banks, retail banks, commercial banks, shadow banks, investment banks, cooperative banks, and credit unions. All of them have their functionalities cut in a certain way that benefits the people of society and, therefore, the country.
Retail banks play an important role in people’s lives, while branch banking services have made the bank have a secure connection with people.
The main difference between branch banking and retail banking is the functionality and configuration of the bank; The bank branch is the extension of the service offered by the parent financial institution when establishing an office elsewhere, while retail banking is the service provided to individuals with essential banking services such as setting up a checking and savings account. , etc.
Comparison table between branch banking and retail banking
Comparison parameter Branch banking Retail banking
|Meaning / Definition||The bank branch is the extension of the service offered by the parent financial institution elsewhere to connect closely with customers.||Retail banking is a financial institution that offers essential banking services to people.|
|Functionality||Bank branch offers the services that the parent used to perform at headquarters. If the parent company is an investment bank, their bank branch will offer the same service.||Retail banking that serves people’s needs helps create a checking and savings account. It can help provide loans for individuals. Credit cards, debit cards are some of the features that retail banks can offer.|
|Decision-making authority||The bank branch has limited rights to make decisions, and most of the time it relies on the head office to confirm its findings.||Retail banking, if it is the parent bank, can make decisions for itself.|
|Competence||As there may be many branches for the parent company, there is great competition between them to show results and turnover.||Retail banks will compete with other retail banks in terms of acquiring customers for their various products.|
|Benefits offered||The benefits offered by the branch banking service depend solely on the decision of the parent bank.||Retail Banks may offer benefits at their discretion.|
What is the bank branch?
The bank branch is the service that a financial institution offers by establishing an office elsewhere. The store office offers the same function as the parent financial institution.
Bank branches can be available to any bank. It can also be a retail bank an investment bank or a credit union.
The bank branch has limited powers to make decisions on critical questions about banking services. The central office makes most of the arrangements.
The idea of offering essential services through branches is profitable. Although technology has developed a lot and banks have been reduced to applications, the need for bank branches becomes inevitable.
Branch banks cannot operate independently in all respects. However, there are targets set for bank branches to verify their performance as well.
This makes them highly competitive with each other. The branch banking system improves financial resources and operates on a large scale.
The significant advantage of the branch banking system is the reduction of risk factors. As there are many branches available, the risk to the parent bank becomes very remote.
There may be a loss incurred by one branch while the profit at another branch may balance it out. This also helps the head office deal with any crisis.
What is retail banking?
Retail banking is a service that financial institutions offer to the general public. Helps people with essential banking services, like creating checking or savings accounts.
Retail banks operate in a systematic way that also offers attractive benefits to customers. Help clients save funds; the funds saved are used by the bank to make loans to other customers.
The interest charged to the borrowers is used for the operating cost and at the same time, a part is paid to the clients who save money at the same bank.
There are three types of retail banks available. Large banks, small institutions or community banks, and online banks.
The services offered by retail banks are also varied. They help create bank accounts; checking or savings accounts.
The checking account is used for day-to-day activities with less or no interest, while the savings account is like a long-term investment that earns more interest.
Retail banks have the power to offer credit cards to customers if they clear their credit status. At the same time, retail banks also offer loans such as home loans, car loans, and even personal loans.
Retail banks also provide security lockers to their customers. This is used to store your valuables where banks guarantee high security for your valuables.
Main differences between branch banking and retail banking
- The main difference between branch banking and retail banking that is, the bank branch is the extent of the services of the parent bank that are offered in another location that is outside the head office. Rather, retail banking is the essential banking service provided to the general public.
- The bank branch offers the critical services provided by the parent bank. In contrast, retail banking offers to create checking and savings accounts for customers along with essential banking services for individuals.
- The bank branch has limited decision-making authority, while retail banks can make their own decisions on critical issues.
- The level of competition for the bank branch is with the other branches of the parent bank, while the retail bank’s game is with the other retail banks.
- The benefits offered by bank branches are after confirmation by the parent bank. On the contrary, retail banks have the right to provide benefits to customers without the consent of anyone.
Banks that operate in a streamlined manner offer many benefits to a country’s economy. It is good to note that the bank branch has limited decision-making power. When there are many branches developed, it is always advisable to have a warehouse at one end to monitor the procedures.
The critical responsibility indicator of each employee in a bank branch shows the performance of the staff. This generates competition and this competition generates growth. Invariably, the growth of the banking sector means a benefit for the people and the country.
Retail banking, on the other hand, acts as a bridge between people who save and people who need money. This also establishes the balance in the standard of living of the people.