What Is Retail Banking? (2024)

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Retail banking, also called personal banking or consumer banking, is financial services geared toward individual customers rather than large corporations. Retail banks offer products like savings accounts and debit cards to the general public, and working in retail banking requires high levels of customer service.

In this guide, we’ll go over:

  • Retail Banking Definition
  • Retail Banks vs. Other Types of Banks
  • Types of Retail Banking Jobs
  • How to Get Into Retail Banking

Retail Banking Definition

Retail banks offer products and services to individuals, families, and small businesses instead of corporations, government organizations, or other banks. Some banks are exclusively retail- or consumer-oriented, meaning they don’t have any branches or divisions specializing in commercial or investment banking services.

Other retail banks are divisions of larger banks. For example, Bank of America has consumer (retail), investment, and commercial banking operations. Its consumer or retail banking functions include offering mortgages, personal loans, and credit cards to individuals, as well as worldwide ATMs.

Retail banking is truly a community effort — the money you deposit into a bank funds loans and mortgages for other customers. The interest charged on these loans is how retail banks make money. Additionally, the Federal Deposit Insurance Corporation (FDIC) insures banking deposits. So, if you go to the bank to withdraw your deposits and the bank doesn’t have the money, you have an insurance policy that will (usually) ensure you don’t lose your funds.

Products and services available at most retail banks include:

  • Checking accounts
  • Savings accounts
  • Debit cards
  • Credit cards
  • ATMs
  • Mortgages
  • Personal loans

What Is Retail Banking? (1)

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Retail Banks vs. Other Types of Banks

The main differences between retail banks and other types of banking institutions are who the consumers are and what products and services are offered.

Commercial or corporate banks are primarily for businesses. These banks offer similar products as retail banks, like deposit accounts and loans. However, commercial banking also involves more comprehensive lending services, merchant services (like credit card transaction processing), and international trade and commerce assistance. Learn more about working in a commercial bank with JPMorgan’s Commercial Banking job simulation.

Investment banks provide various services to businesses, corporations, and governments. For instance, an investment bank can help clients raise capital through underwriting or issuing debt securities, facilitate mergers and acquisitions, and manage assets for clients, like investment portfolios. Explore a career in investment banking with the Bank of America Investment Banking job simulation.

Credit unions are member-owned financial institutions that serve a community of members and owners, all of whom vote to elect boards of directors. Credit unions offer similar services as retail banks, except services are only available for members and credit unions are not-for-profit — credit unions reinvest the majority of their income into products and members.

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Types of Retail Banking Jobs

Teller

Bank tellers, sometimes called clerks, help customers with everyday banking needs, like making deposits, cashing checks, and withdrawing funds. A bank teller needs excellent customer service skills to answer customer questions efficiently and handle concerns and complaints effectively.

“In retаil bаnking, еmployееs оften stаrt аs tellers оr сustоmer service rеprеsеntаtivеs аnd grаduаlly mоve uр tо brаnch mаnаgement оr finаnсiаl аdvisоry rоles,” says Dennis Shirshikov, professor of economics and finance at the City University of New York and head of growth at Awning. “Strong perfоrmers mаy eventuаlly become regionаl оr distriсt mаnаgers, overseeing multiple brаnches.”

Branch Manager

Branch managers are responsible for one retail branch location or office. In many ways, a branch manager becomes the face of the bank for that community, overseeing daily operations and promoting relationships between the bank and its customers. A branch manager also hires employees and ensures the location meets sales and revenue goals.

Auditor

Auditors in retail banks review the bank’s financial records and details to ensure the information is accurate and that the bank is complying with local, state, and federal laws and regulations. Many banking auditors are certified bank auditors, or CBAs, who have received a certification from the Banking Administration Institute. However, some auditors are certified public accountants (CPAs) who specialize in reviewing banks.

Loan Officer

Loan officers work with customers to apply for loans. Many loan officers help individuals and small businesses secure funding through personal and small business loans. However, some loan officers specialize in mortgages, which are especially complex. To facilitate mortgages, loan officers must be licensed as mortgage loan originators (MLOs).

Underwriters

Underwriters can be loan officers themselves or work with loan officers. The purpose of an underwriter is to evaluate creditworthiness and determine if clients are eligible for loans and mortgages. An underwriter is responsible for verifying clients’ financial details and measuring the risk of offering them a loan. Underwriters can specialize in specific types of loans. For example, mortgage underwriters focus on reviewing and evaluating mortgage loan applications.

Personal Banker

A personal banker assists customers in setting up new accounts and servicing existing accounts. Some personal bankers may be financial or personal finance advisers, meaning they are skilled at guiding clients through complex situations, such as taxes and securing mortgages. Personal finance advisers also help consumers meet goals by setting budgets and planning retirement funds.

What Is Retail Banking? (2)

Standard Bank Retail Banking

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How to Get Into Retail Banking

Education

Some roles in retail banking, like tellers, may only require a high school diploma. However, most positions require at least a bachelor’s degree in finance, accounting, or economics. A degree in finance gives you the foundation in mathematics needed to handle the day-to-day duties in banking but also allows you to better understand how retail banks work as part of the local, national, and global economy. Bank managers, auditors, loan officers, and personal bankers specifically benefit from finance and economics degrees.

Some retail bank employees may even pursue master’s degrees or Ph.D.s to make themselves more marketable and to increase their knowledge of finance and economics.

Shirshikov recommends students “gаin prаcticаl exрerience through internships оr entry-level pоsitiоns in thе bаnking industry.” Additionally, Shirshikov says that through networking and finding mentors in the industry, students can “leаrn аbout opportunities аnd stаy сurrent оn industry trеnds.”

Certifications and Registrations

Certain roles within a retail bank may require or benefit from certifications, licenses, or registrations, such as:

  • Financial advisers may need to be qualified and registered through the Financial Industry Regulatory Authority (FINRA) if they offer investment advice or sell investment options, such as stocks or bonds. Additionally, financial advisers can improve their skills and marketability with a Certified Financial Planner (CFP) certification.
  • Loan officers specializing in mortgages must be licensed through their state and the Nationwide Mortgage Licensing System.
  • Personal bankers can become Certified Personal Bankers through FINRA or gain a Personal Banker Certificate from the American Bankers Association (ABA).
  • Underwriters have certification options depending on the types of loans they underwrite. For example, mortgage underwriters can become certified through the National Association of Mortgage Underwriters (NAMU).
  • Auditors can become Certified Bank Auditors by meeting education and experience requirements and passing an exam by the Banking Administration Institute (BAI).

Skills

Regardless of the position, retail bank employees need strong customer service and communication skills to adequately service their customers and communities. Other skills required for all retail banking careers include:

  • Problem-solving skills
  • Analytical thinking
  • Mathematical skills
  • Leadership and management skills
  • Teamworking and collaboration

Think a career in banking is right for you? Get job-ready with Forage’s free finance job simulations.

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What Is Retail Banking? (3)

Written by

McKayla Girardin→

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McKayla Girardin is a NYC-based writer with Forage. She is experienced at transforming complex concepts into easily digestible articles to help anyone better understand the world we live in.

What Is Retail Banking? (2024)

FAQs

What is retail banking answer? ›

Retail banking, also known as consumer banking or personal banking, is banking that provides financial services to individual consumers rather than businesses. Retail banking is a way for individual consumers to manage their money, have access to credit, and deposit their funds in a secure manner.

What do you do in retail banking? ›

Retail bankers are often known as customer service representatives or personal bankers, reflecting the customer-focused elements of the role. They work for high street banks, where they offer customers financial guidance, advise them of suitable products and services, and assist them with banking needs.

What is retail banking dealing with? ›

Retail banking is the part of a bank that deals directly with individual, non-business customers. This operation brings in customer deposits that largely enable banks to make loans to their retail and business customers. Corporate, or business, banking deals with corporate and other business customers of varying sizes.

Why is it called retail banking? ›

Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking (corporate banking).

Is Wells Fargo a retail bank? ›

Wells Fargo & Co (WFC) is a diversified financial service holding company that offers retail and wholesale banking, and wealth management services to individuals, businesses, high-net-worth individuals, and institutions, through its subsidiaries.

What is the difference between a bank and a retail bank? ›

The key difference between retail and commercial banking is who the products are designed for. While retail banks service individuals, communities, small businesses, and families, commercial banks focus on larger companies, government entities, and institutions.

Is retail banking a teller? ›

Sometimes, a retail banker may also serve as a teller. Some banks employ tellers apart from personal bankers, as these professionals perform the responsibilities of a banking advisor, such as handling loan applications. Tellers account for the majority of retail banking positions.

What is the hard skill in banking? ›

In the finance world, hard skills can be defined as one's ability to build financial models or financial statements. It can also be defined in other ways, such as fluency in a second language, understanding how to use different software to edit photos, or building PowerPoint slides.

Does retail banking make money? ›

Banks make money by imposing service charges on their customers. These fees vary based on the products, ranging from account fees (monthly maintenance charges, minimum balance fees, overdraft fees, and non-sufficient funds [NSF] charges), safe deposit box fees, and late fees.

Is retail banking a skill? ›

Retail banking requires a combination of hard and soft skills. With a hands-on experience in hard skills, you need good written and verbal communication skills.

Is retail banking a good job? ›

Retail bankers can generally expect to earn solid salaries and receive good benefits. With entry- and mid-level positions, salaries are sometimes lower than other banking positions, such as business banking and private wealth management.

What are the characteristics of retail banking? ›

What Are The Features of Retail Banking?
  • Characteristics of retail banking.
  • Small ticket transactions. One of the main characteristics of retail banking is the small number of transactions in this sector. ...
  • Diversification. ...
  • Several branches. ...
  • Multiple Services. ...
  • Strong competition. ...
  • Higher administrative fees and expenses.
Oct 17, 2023

What are the three types of retail banks? ›

What are the Different Retail Bank Types? Broadly speaking, there are three main retail bank types. They are commercial banks, credit unions, and certain investment funds that offer retail banking services. All three retail bank types work toward providing similar banking services.

Who controls retail banks? ›

The Federal Reserve is responsible for supervising--monitoring, inspecting, and examining--certain financial institutions to ensure that they comply with rules and regulations, and that they operate in a safe and sound manner.

What is retail vs direct banking? ›

Key takeaways

Brick-and-mortar banks offer face-to-face customer service. Online-only banks, also known as direct banks, don't operate their own branch locations – limiting customer service to phone calls and online chats.

What is the difference between retail banking and core banking? ›

Retail banking focuses on non-commercial transactions and consumer loans while core banking focuses primarily on businesses and commercial loans.

What is retail banking and business banking? ›

Retail banking and corporate banking are two different types of banking services that cater to different types of customers. Retail banking services are geared towards individual customers, while corporate banking services cater to corporate clients.

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