Retail Banking concepts, its type u must learn and understand

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Before going through the topic let’s see the evolution of retail baking across the globe. At the early establishment of retail banking entities like Capgemini and EFMA(Europian financial management and association)along with ING had studied and found the basic needs of the financial sector.

Their survey was on global retail banking to provide insight into the financial community with the help of the world retail baking report( WRBR)forum. This study was conducted in 2006 by over 142 banks in 20 countries. These 20 country covers Europe – the eurozone like Austria, Germany, France, Belgium, Ireland, Italy, Netherlands, Portugal, Spain and None eurozone like check republic, Norway, Poland, Slovakia, Sweden, Switzerland, UK. Besides, other countries are from North America and the Asia Pacific.

The WRBR in 2006 gave an overview of how people use retail products day by day in banks. Besides, how much money they were paying to avail services, etc were the main highlighted of the report. Knowing all the facts and figures for the first time the retail banking services were introduced.

Retail baking in the country’s economy

The growth of a country’s economy mostly depends on its financial services. There are several financial intuitions which are working in this development. Banking institutions are also one of them to provide valuable contributions through Retail Banking. In fact, It is considered as the backbone in the development of the country’s economy.

Retail baking finance

Banking is a key source in financial institutions. And Retail baking is the primary tool of any Banking institution when it comes to daily growth. As a customer, it is important for you to know what is retail banking. Besides, in order to get the basic facilities of retail banking, the customer has to include retail Banking as a pathfinder.

Let’s explore the topic

What is Retail Banking?

To understand the meaning of retail banking, first, we have to understand the meaning of “Retail“. Retail deals with the goods and services offer to a customer for sale. These services and goods are come with a smaller quantity for use and generally not consider for resale. Therefore a fixed amount is decided to sell and it is known as the retail price. The customer who is focused on this structure is deemed as a retail customer.

Retail banking

The term retail baking is dealt with the product and services offered by the Bank to its individual customer. It solely focuses on the consumer market for its sale and growth.

Retail banking is also known for its customer service. Besides, the mechanism behind retail baking is to focus on the basic need of an individual customer. The main aim is to focus the targeted individual customer like high-income groups, salaried, self-employed groups, etc. Although it focuses the targeted customers are primary but its facilities are for every other individual invariably whether working or non-working group.

Establishment of Retail banking

Retail baking is introduced by the commercial bank, small community bank, for their retail customer. Like wholesale baking, retail banking is expanding its business solely in the consumer market forum. The consumer market forum of any country depends on the price decided by the National statistic agencies. This decided price is known as the CPI or Consumer price index.

Depending upon the geographical population area like rural, urban, consumer habits these prices are decided. The commercial banks and their associates decide their retail price according to these facts from time to time.

Retail banking offers a large scale of products related to personal baking services. In addition to this day to day banking transaction services, passbook updates, issue statements, grievance redressal request services are famous in its category.

Types of the approached business model in Retail Banking

Depending upon the type of Bank the business model is decided to approach retail banking. Because establishment protocol in the bank in a rural area is different than a foreign bank in aborad.

Therefore, the business model is divided into three categories to implement retail baking.

1.Strategy Business Unit approach. 2.Departmental approach 3.integrated approach Strategy

Business model

1. Strategy Business Unit approach

This model approach is generally adopted by a private bank and a foreign bank. In this model, the basic structure is to focus on profit generation in retail banking. Their product and services to customers are growth business orientation.

If the Goal of this model if not approached they discontinue the retail service product to customers. One can understand it by example. In the past during the late 1990s, BNP Paribas entered into the marketing space and introduced profit-making oriented products. But their products were unable to do the same and quit the marketing space after some time.

Likewise American express came out with the credit card services to its customer after looking viability of stocks in the market. ABN bank also entered in the late 1990s and positioned an aggressive business approach to its customer. ABN entered the market space with the introduction of the credit card business but criticize it due to the threat to other credit card players in the market.

2.Departmental Approach

All the public sector bank in countries like India run their business model in this approach. The departmental approach is basically positioning the product, business, technology, process, delivery channels through irrespective of the balance sheet size or area of geography. This model is designed solely for poisoning the customer service space. They work for the profit as well as the govt policy adoption to help people of the country.

The retail product in this model is designed to protect customer interest. However, the banks in these categories also approach the SBU model to its highly valued customer. Depending upon the target some of the public sector banks tie up their subsidiary bank to work on in both strategies to approach time to time.

3. Integrated approach

In this business model banks have to work on both models highlighted above. There are a few public sector banks that are adopting an integrated approach to meet their business needs. Besides, the private sector and foreign banks are generally known for adopting the SBU model but looking into customer interest now these banks adopting an integrated approach model too. In retail baking, the main focus is on positioning customer service. So looking into the fact banks now adopting each model as suited for customers.

In general, in all these three business model customers should have to be ultimately benefited. Because, if the bank has to survive in the long run then it would have to give first priority to its customer interest.

Types of Retail banking products in banks

Retail product is divided into the following categories.

1.liability product.

2.Asset Product.

3.other services product.

4.Third-party product.

Retail banking

1. Retail Liability product

Under these product categories, the customer is provided facilities that are divided into further two is a demand deposit and the other is a time deposit.

  • Demand deposit: Demand deposits composite of two products Saving account product and other is current account product. The Saving account is generally opened for saving purposes. Depending upon the banks it had many variants. Like in India SBI is the largest public sector bank has many variants like a basics savings account, saving plus account, for minor pehela Kadam and pehela udan is available.
  • Current account: Its another Demand product is Current account comes with Sbi Surabhi, realtors CA snd power jyoti are famous for its customer. These two products are for customer savings and for business cash storage account. That means on-demand any time can the customer withdrawal his money from his bank account. To execute withdrawal he has to give his consent through withdrawal slips or cheques is mandatory.
  • Time deposit: The time deposit is basically for fixed deposit purposes. That means you have to save your fixed amount for a certain period of time. And after the maturity or in some cases, at the prematurity stage on-demand, you can draw your deposited money anytime.

2.Retail Asset products

In retail banking, these asset products play an important role to boost the banking business. It included loan products like a car loan, housing loan, business loan, tractor loan, education loan, KCC loans, etc. The loan product is known as asset product in retail banking.

Because it builds the asset for the bank business in terms of profitability and growth. Depending upon the Banking channels most of the banks introduced their own featured loan product under the guideline of RBI in India. If we take an example of India’s largest public-sector banks SBI, then the home loan product of SBI in India are SBI maxgain, SBIreality, NRI home loan, etc are famous in the Indian market today.

in addition to this, there are various other banks in the globe too are executed it righty. And also prove themself famous for driving their customer to have the best Asset product in comparison to others in the market today.

3.Other service products

Other services products are driving the user experience to the next level. These service products include credit card, debit card, Atm card, telephone banking, mobile banking, internet banking, depository services, and broking services. These services are provided to customers with the aim of giving hassle-free services. Using these products customers became familiar with the technology owned by the bank. This other service product acts as hyperlinks in retail banking to the bank to provide the best service. Because users can directly access banking channels without visiting banks right straight from his home. He can also interact with the customer service points at any time 24×7 suitable for its choice.

4. Third parties service product

In retail baking, third parties services include Life insurance policy, mutual fund services, retail sale of Gold coins, bill payment system, multicity cheque clearing, payment gateway for rail, air, tickets are famous. Besides it includes wealth management services, portfolio generates services, Govt business, etc are included. In this product, the bank acts as a mediator between the customer and third-party service provider.

This third party product is fee-based or commission-based services for banks. In these commission-based services Bank generate more than 50%of the bank revenue in comparison to other services available in the Banking space.

So in terms of the profit-making scenario, this product is the best at all times.


The fundamental development of Retail banking starts from the market survey about the need of the customer and the availability of market gaps. It all indicates the need for a retail banking strategy to build on. Today Baking industry knowing the fact changes their strategical approach day by day is crucial.

Being a bank customer it is also important for him to know the changing scenario. So that he can use and justified it with the availed product for the sake of the bank and for himself and that would be incredible.




Categories: BankingBlog


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