Difference Between Retail Banking and Branch Banking (With Table)

A bank is an institution that manages money for its customers, makes loans, and is the market for investment in bonds and stocks. The bank can also provide personal savings accounts, mortgages, credit cards, insurance, and other financial services. Banking, however, can be of various types depending on its functions.

Retail Banking vs Branch Banking

The difference between retail and branch banking is that they differ in their primary function. Retail banking provides banking services to customers mainly associated with retail, while branch banking caters to the services to individuals in the different branches of a bank.

The meaning of retail banking is the banking that’s provided to the customers directly. The advantage of retail banking is that it helps in bringing out innovations. The types of retail banking are Consumer Banking, Business Banking, Savings & Loans, Mortgage Banking, Corporate Banking, Private Banking, and International Banking.

Branch banking has become very popular in today’s society. A lot of banks are opening up branches to reach more customers. Branch banking has several benefits for both the customer and the bank. Customers get banking done in a shorter amount of time without having to travel across the city. Bankers also get to meet more customers and help grow their bottom line.

Comparison Table Between Retail Banking and Branch Banking

Parameters of ComparisonRetail BankingBranch Banking
What Is It?Retail banking provides bank services to customers in retail.Branch banking provides services to all individuals.
Governing BodyThe retail bank itself takes all its decisions.The parent bank decides all the actions of the branch banks.
CustomersRetail banking has a smaller customer base ie only those associated with retail.Branch banking has a larger customer base as everyone is associated with some form of branch banking.
FunctionRetail banking deals with deposits that enable business loans.Branch banking deals with account and money services to the common man.
Business ManagementRetail banking also deals with business management.Branch banking does not deal with business management.

What is Retail Banking?

Retails banking refers to the many financial services that banks provide to individuals and businesses. Broadly speaking, retail banking services include checking, savings, and other transactional accounts, as well as a variety of loans, credit cards, and certificates. While retail banks can serve individuals, they also manage deposits and accounts for businesses.

Some businesses use the accounts to meet regulatory requirements, while others use them as a form of financing. Retail banking is the practice of accepting deposits and extending loans to retail customers. Retail banking is a common practice in the United States, and it is a branch off of commercial banking.

The retail banking system works by accepting money from a customer and then lending it out to other customers. Retail banking is a large part of today’s economy. There is a huge network of retail banks that is used by millions. Retail banking is a service that many banks provide.

It’s a great way to manage your money and access cash when you need it. Not only do you get access to free ATMs, but you can also use your bank card to purchase goods and services. Many banks also provide special deals and discounts when you use your bank card.

What is Branch Banking?

Branch banking is a model in which a bank is operated from a physical location. The location can be a storefront where you can conduct business in person. Branch banking is the opposite of the computer model in which a bank’s services are geared toward online users with a website in which business is conducted.

Branch banking is a growing industry in the United States in which more and more people are using physical locations for banking for their finances. Branch banking is a great way to meet new people and is a trusted model in the banking industry. Branch banking establishes a new branch location to service individuals and businesses for a specific geographic area.

Branch banking can also possibly include agencies and partnerships. Lenders require a branch banking license, a branch banking certificate of authority, and a branch bank charter. Branch banking has been a prominent banking technique for decades.

Branch banks are operated by a single company, but the branches have a separate identity from the head office. It was first developed by a man named Senator Henry Clay in 1832. He was a powerful figure in the development of banks and a supporter of a faster-growing economy. He proposed a bill that would be later become known as the “Bank Plan of 1832.”

Main Differences Between Retail Banking and Branch Banking

  1. Retail banking is a part of branch banking where the different branches of one commercial bank provide services to retail customers, whereas branch banking is not a part of retail banking.
  2. Retail baking deals only with business owners and dealers, while branch banking has customers from all fields of profession.
  3. Retail banking deals with numerous small business transactions, while branch banking deals with fewer transactions.
  4. Retail banking is associated with credit or debit bank transactions while branching banking deals with persons dealing with individuals in a bank.
  5. Retail banks make their own decisions; however, branches of a band work under the same set of rules and decisions as provided by the parent commercial bank of which it is a part.
  6. Retail banking faces less competition in comparison to branches of banks.

Conclusion

It is more important to understand the differences between these two types of banking before deciding which is right for you. Today, more and more people are opting for online banking services. However, there are still some people who prefer to visit a physical location when they are banking. The reasons are varied, but some advantages exist for both online banking and retail/branch banking.

With the knowledge of retail and branch banking, you can make the most of your banking experience and control your financial future.

References

  1. https://books.google.com/books?hl=en&lr=&id=dBrEdHGaobQC&oi=fnd&pg=PA74&dq=retail+banking&ots=B01hFYW3B5&sig=1DsaRvagvIzJ_sX1dal0UwhLLL0
  2. https://www.nber.org/papers/w11291
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