Banking is one of the most reliable sectors in this advancing world. It is a trustworthy industry that provides a safe environment to store cash and credits.
Not only this, but it also helps people to keep an account of their regular expenditures.
Since it is an important industry, everyone should know the difference between various banking systems.
Key Takeaways
- Personal banking refers to the banking services provided to individuals by commercial banks for their financial management.
- On the other hand, private banking is a specialized service that caters to high-net-worth individuals by offering personalized financial advice and management.
- The primary difference between personal and private banking lies in the level of service, as private banking offers exclusive services to high-net-worth clients while personal banking serves the masses.
Personal Banking vs Private Banking
The difference between Personal Banking and Private Banking is that Private Banking targets a group of people chosen by the bank. People with a substantial net worth enjoy special monetary services and value-added aids under this banking.
Personal Banking, commonly known as Retail Banking, is a service the bank gives to people individually. It serves the consumers instead of companies and corporations. In simple terms, the process of banking that deals with individual or specific customers is called Personal Banking/Consumer Banking.
Private Banking is offered to selected people with a decent net worth in the bank. The bank serves customized services that add value to the customers’ assets. In short, Private Banking was a firm form of Banking started in Venice. The initials banks were centred around maintaining the record of wealthy families.
Comparison Table
| Parameters of Comparison | Personal Banking | Private Banking |
|---|---|---|
| Denotation | It denotes the banking services that are given individually to the consumers. | Private Banking services are only given to people with high net worth. |
| Terms of Services | Personal Banking provides general services to all its consumers. | The private Banking sector offers various financial as well as value-added services. |
| Genesis | The concept of Personal Banking originated after the introduction of different banking sectors. | It is the first mode of banking that originated in Venice. |
| Synonyms | Personal Banking is also known as Retail or Consumer Banking. | The name Private Banking was given to keep it different from other subordinates. |
| Privacy and Secrecy | Although it ensures customers’ privacy, one can not hide their account records from the official department. | It ensures the total security and secrecy of its customers. The Swiss Bank is an excellent example of a financial company that supports tax evasion. |
What is Personal Banking?
Personal Banking is the most common form of Banking, also known as Retail or Consumer Banking. Retail Banking works towards meeting the needs of customers individually.
To manage the assets of the consumers, to deposit and credit their money with an account of their records, is what Personal Banking means.
Personal Banking includes services like debit cards, personal loans, savings accounts, current accounts, fixed deposits, and many more.
With time Consumer Banking is growing through online mode. Financial banking firms are switching to online mode, keeping in mind the safety and privacy of their customer services.
There are several types of Retail Banks in the market currently. They work on the concept of giving and taking.
When a Consumer opens a savings account, the bank lends their money to other clients, keeping a certain amount in the federal reserves.
The formula of Personal Banking generates big revenue every year for the banks. Retail banks are coming up with innovative ideas every day to keep their customer service in check.
What is Private Banking?
As the name sounds, Private Banking serves certain people with high net worth in the market.
Apart from customized services, these high-net-worthy people are also given value-added services with a bank advisor.
It comprises value-added services like discretionary asset management, brokerage, tax advisory, etc. It has quite a history, as it was the first mode of Banking that originated in Venice.
The first few banks in Venice were targeted at providing services to the wealthier population. Private Banking was named from a traditional background to keep the difference from Retail Banking.
Some Royal families, like the Dutch Royal Family and the Princely Family of Liechtenstein, were among the first to enjoy private banking services.
Not only this, but Private Banking also helps high net-worth individuals to maintain the secrecy of their assets from the income tax department.
One of the most prominent examples is the Swiss Bank. Since Tax evasion is not a crime in Switzerland, people tend to store their money to keep themselves free from paying taxes.
The United States of America is considered to be the biggest market in the Private Banking sector. It consists of more than 29% of the total high-net-worth individuals of the world.
Main Differences Between Personal Banking and Private Banking
- Personal Banking is meant to serve customers’ needs with general services, whereas Private Banking maintains secrecy and provides customized services to high-net-worth people.
- Private Banking also offers value-added services to its customer. On the other hand, this is not the case with Personal Banking.
- Fiscal Banking companies also provide high-net-worth individuals with a bank advisor, but Retail Banking customers are not given these facilities.
- While the Personal Banking system stays open to the tax departments, Private Banking maintains the secrecy of its customer up to a great extent.
- Private Banking was the first Banking system that started from the banks in Venice, whereas Personal banking came into action much later.
- http://www.irbis-nbuv.gov.ua/cgi-bin/irbis_nbuv/cgiirbis_64.exe?C21COM=2&I21DBN=UJRN&P21DBN=UJRN&IMAGE_FILE_DOWNLOAD=1&Image_file_name=PDF/banks_2009_4_1_7.pdf
- https://books.google.com/books?hl=en&lr=&id=x-vtgdzNoNoC&oi=fnd&pg=PR7&dq=difference+between+personal+banking+and+private+banking+&ots=X_S7ykObxy&sig=ZuVRudXLkhjy49xUvMwBlxBwRqc
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