When it comes to banking, there are several different types of options. Of course, not all of the services are going to be built for a single person or company, and there is quite a little bit of overlap between them, with many offering the same services albeit for a different target market. Here, we want to look at the four types of banking that you should know about.
Retail banks are the banks that the vast majority of people are familiar with. If you have a personal bank account, then your personal bank account will be held with a retail bank. If you have a credit card, have taken out a loan (including a mortgage), then you will have dealt with a retail bank.
Retail banking services are, traditionally, offered through bank branches on the High Street. You can obtain other banking services through these branches, but the bulk of the focus will on retail banking. However, this is often the area which makes the least amount of money for a bank. The bulk of a bank’s money will be derived from other banking aspects. One of the main reasons retail banking exists is to ensure that the bank has money ‘to hand’ which they are able to use to fund other banking ventures.
Business banking is much the same as retail banking, albeit offered specifically to companies. This means that business banking services will deal with business bank loans, business credit cards etc.
When a company opts for business banking, the account will be opened up in the name of the business, often with specific people named on the account who will have access to the various business services.
Dependent on the business banking services that are required, the business may need to supply a business plan. This is incredibly important if the business is seeking a loan because the bank needs to know that they are going to get their money back.
Business banking is important for companies of all sizes. There will often be a fee attached for business banking, something which is not going to be there for retail banking. This may be a set fee for operating your bank account through the company, or there may be a transaction fee for everything that you do with the account. This is something which will be established by the bank when you open up your account.
To be honest, there is going to be a lot of overlap between business banking and corporate banking. In fact, for many banks, there will be little to no difference between the two. However, when the majority of people think of corporate banking, they think of investment and the like.
Many companies who wish invest their earnings to increase them will deal with corporate banking. However, it is also a service used by those who are looking to sell shares in their company. For example; you will find that a lot of companies who are about to list themselves on the stock exchange will use corporate banking.
Proper corporate banking is a very niche type of business, and there are few banks who are able to deal with the vast amounts of wealth dealt through corporate banking. It is corporate banking which often delivers the biggest returns for a bank, and the companies that do it well tend to pick up the vast majority of clients.
The good companies for corporate banking will have branches all over the world, which is going to make it easier for companies to share their money over international borders. You will rarely find a bank that operates in a single country which offers proper corporate banking services because no business will want to deal with them.
Private banking is much the same as retail banking, although this is for high wealth individuals. The bank will take a very ‘hands-on’ approach to deal with the money for an individual. This may include providing information on the best places to invest the cash. With private banking, the idea is that the bank will not only store the wealth but significantly increase the wealth of an individual. This often generates a significant amount of cash for a bank.