Retail vs Universal Banking: Difference and Comparison

Individuals used to put their money in storage spaces, underground, or with grains before banks came into the picture. Their money was sometimes stolen or consumed by rats. In either case, current banking aided in the resolution of this issue.

Banks lend money and contribute to the growth of the economy. Credits assist in the loaning of funds to agriculture, education, small businesses, and professional organizations, resulting in the creation of jobs and purchasing capacity.

Cooperative banks, savings banks, retail banks, universal banks, utility banks, public sector banks, and so on are examples of various types of banks. Each of these banks has its own set of capabilities.

Key Takeaways

  1. Retail and universal banking are two banking systems that serve different customer segments and offer different services.
  2. Retail banking focuses on individual customers and small businesses, providing basic banking products and services, such as savings accounts, loans, and credit cards.
  3. Universal banking, on the other hand, caters to corporate clients and high-net-worth individuals, offering a wide range of financial products and services, including investment banking, asset management, and insurance.

Retail Banking vs Universal Banking

The difference between Universal and Retail Banking is that Universal banking is a structure wherein banks give a wide diversity of exhaustive money-related organizations, including those specially designed to retail, business, and adventure organizations. In contrast, Retail banking is conventional monetary that happens among purchasers and their banks. A retail bank offers customers crucial monetary organizations, including monetary records, venture records, and credits.

Retail Banking vs Universal Banking
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Banking Quiz

Test your knowledge about topics related to banking

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What is the full form of KYC?

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What is a credit card?

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What is the name of the type of loan where a borrower pledges an asset as collateral for the loan?

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What is the name of the type of loan where the borrower can use the loan proceeds for any purpose, without specifying the end use of the funds?

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What is the payment method's name where a customer can make payments using their smartphone or computer?

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How does PayPal work?

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What is the most common type of account for individuals to save money in a bank?

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Which of the following maybe the reason for returning a check?

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A retail bank is a bank that offers money-related kinds of help, for instance, managing their money by giving them permission to some profitable monetary organizations like credit, financial direction, etc., to general society.

Universal Banking is a financial system that gives workplaces more than one sort of banking. For example, it gives all of the workplaces of business banking and the workplaces of adventure banking close by some other organizations like security.

Subsequently, it is such banking under which different kinds of banking workplaces are given.

Comparison Table

Parameters of ComparisonsRetail BankingUniversal Banking
DefinitionA retail bank is a bank that offers monetary types of assistance, for example, dealing with their cash by giving them admittance to some productive financial administrations like credit, monetary guidance, and so forth, to general society.It performs elements of saving cash, loaning credits, contributing and protection, etc.
Services“Retail Banking” offers monetary types of assistance for people and families. Credit, deposit, and money management are the three most relevant features.Universal banks have several drawbacks, including a lack of expertise in long-term lending, the risk of failure, and the issue of non-performing assets, among others.
AdvantageA significant disadvantage is observing and following up on the tremendous volume of credit accounts instigating banks to spend vigorously in the human asset division.Universal banks have several benefits, including easy service marketing, profitable diversions, resource use, etc.
DisadvantageRetail banking helps the monetary restoration of the country through expanded creation action, and they establish accessible assets for the banks.Rather than managing companies or different banks, a retail bank handles customers.
RoleUniversal banks have several drawbacks, including a lack of expertise in long-term lending, the risk of failure, and the issue of non-performing assets.A Universal Bank participates in the financial transactions of a commercial and investment bank.

What is Retail Banking?

Retail Banking implies a bank division taking care of retail clients rather than corporate clients. Retail banking emphasizes managing clients who are situated in a nearby city.

This sort of banking is a movement done up close and personal, clear and noticeable to the customer, so there is finished straightforwardness. This sort of banking is featured as mass-market banking with various clients with a wealth of exchanges.

The Retail bank doesn’t rely upon actual retail areas. The name “retail” really alludes to the planned action plan.

A “retail” business is something that works on moderately small or medium-sized volumes or offers merchandise and ventures for utilization as opposed to something which utilizes the utilization of products and enterprises from other businesses.

The degree of administration at a retail bank, by and large, relies upon pay level and stores and how their relationship with the bank. Retail banking is likewise called customer banking and private banking.

Administrations that are given from retail banking incorporate saving the record, current records, different kinds of advances, home loans, charge and Visa, authentication of the store, retirement arranging, and so forth. Client store is the primary hotspot for retail banking.

The Retail bank benefits from the premium edge of the loan specialist and gets exchanged.

retail banking

What is Universal Banking?

All Universal Banking is a sort of banking that plays out the elements of various types of banks. It serves the pieces of Commercial Banking and Investment Banking, and not just this; it offers different kinds of assistance incorporating protection.

Likewise, its fundamental rationale isn’t beneficial procuring. It continues working regardless of whether it isn’t making a benefit.

Elements of Universal Banking:

1. Investing Banking: Universal banks also offer the pieces of putting away the public cash.

2. Commercial Banking: Universal Banks give the elements of the business bank, for example, storing the public cash and loaning credits to them and numerous different parts.

3. Insurance: Universal Banks likewise offer administrations like protection.

Benefits: the primary benefit of universal banking is that any individual can have offices of more than one sort of bank under one rooftop. It helps clients are putting and propose the best arrangement in speculations. It ensures that the assets are used impeccably.

Inconveniences: even though it has plenty of benefits still, there are a few hindrances with widespread banking, which remember rigidity and deferral for working, and some more.

Along these lines, universal banking combines banking and gives various administrations under one bank.

universal banking

Main Differences Between Retail Banking and Universal Banking

  1. “Retail Banking” offers monetary types of assistance for people and families. Credit, deposit, and money management are the three most relevant features. On the other hand, “Universal Banking” performs elements of saving cash, loaning credits, contributing and protection, and so forth.
  2. Rather than managing companies or different banks, a retail bank handles customers, whereas a universal bank participates in the financial transactions of a commercial and investment bank.
  3. A retail bank is a bank that offers monetary types of assistance, for example, dealing with their cash by giving them admittance to some productive financial administrations like credit, monetary guidance, and so forth, to general society. In contrast, Universal banking is a framework wherein banks give a wide assortment of thorough monetary administrations, including those custom-made for retail, business, and venture administrations.
  4. Retail Banking helps the monetary restoration of the country through expanded creation action, and they establish accessible assets for the banks. On the other hand, Universal Banks have several benefits, including easy service marketing, good diversions, resource use, and so on.
  5. A significant disadvantage is observing and following up on the tremendous volume of credit accounts instigating banks to spend vigorously in the human asset division. In contrast, Universal Banks have several drawbacks, including a lack of expertise in long-term lending, the risk of failure, and the issue of non-performing assets.
References
  1. https://www.emerald.com/insight/content/doi/10.1108/02652329610151340/full/html
  2. https://www.sciencedirect.com/science/article/pii/S0304405X00000660

Last Updated : 11 June, 2023

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