Once upon a time banks were places where people went to deposit or withdraw their money and that was the end of it. But no more. Banks have since diversified into many segments, which broadly fall under the categories of retail and corporate or commercial banking. But what is the difference between retail banking and corporate banking?
Retail banking refers to the division of a bank that deals directly with retail customers. It is the visible face of banking to the general public that is also known as personal or consumer banking. Few banks focus solely on retail clientele and most retail banking is conducted by separate divisions of the banks. Nevertheless, retail banking represents an extremely important source of funding for most banks.
Key Functions Of Retail Banks
Some key functions of retail banks include checking accounts, savings accounts, lines of credit, car loans, and personal loans at high interest rates. They also offer credit cards and remittance services.
Corporate or business banking refers to the aspect of banking that deals with corporate customers. Corporate banking is a key profit center for most banks, however, it is also the source of regular write-downs for loans that have unfortunately gone bad.
Key Functions Of Corporate Banks
Some key functions of corporate banks include loans and other products of credit. Managing the working capital of corporations is another area of function. Trade finance, bill collection, letters of credit letters and payroll are common tasks handled by this sector. Banks might also offer asset management to their clients through commercial banking intervention.
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