Retail Banking refers to services offered by a bank directly to consumers, as opposed to dealing with large corporations or other financial institutions. Typically, retail banking involves offering the following services –
• Transactional Accounts – current account: This account is not intended to either save money or earn interest. Its only purpose is transactional convenience, as funds can be deposited or withdrawn any number of times.
• Savings Account – This account involves depositing funds with a retail financial institution, and earning a return on the money. However, this money cannot be withdrawn freely, and cannot be accessed by issuing a cheque.
• Debit , Credit and ATM cards
• Traveler’s cheque – With debit / credit / ATM cards gaining popularity, traveler’s cheques are no longer in common usage.
• Mortgages – This involves raising funds to purchase property (or a home loan), wherein the lender has a lien on the property so purchased. In other words, in case the borrower fails to honor the commitment of repaying the loan, the lending institution can legally repossess the property.
• Home Equity Loan – This implies raising funds to finance an activity (like education, medical bills or some other substantial expense) wherein the home is used as collateral.
• Personal Loans – These loans are typically meant for a major expense, for instance, financing a marriage or foreign travel, and the interest on such loans is usually quite high. For the borrower, a personal loan is a sort of consumption loan, unlike, say, an auto loan which can be treated as a form of investment.
• Certificates of Deposit (CD) – A CD is similar to a time deposit, in the sense that the funds so held are insured. A CD is usually meant to be held till maturity, for a designated period of time, and at a fixed interest rate.
Retail banking incorporates the services extended to consumers by commercial banks. The term retail refers to the storefront-shopping nature of commercial banking services. Most commercial banks have comprehensive retail banking services and products to approach a broad consumer base.
IMS Proschool ‘s Programs for careers in Retail Banking
CFP Certifications: The CFP curriculum has been especially structured to include Financial Planning, Risk Analysis, Retirement Planning, Investment Planning and Tax and Estate Planning. These topics cover virtually all financial requirements of an individual over his/her entire life cycle, and hence it links well with Retail Banking. The Retail Banking professional has to first understand the client’s present financial status and projections for the future. This is the very beginning of a customized Financial Plan. After evaluating the risks involved, investments are planned and executed. The final stage is when funds are allocated for retirement and wealth transfer. Over the life cycle, when the risk appetite is high, equity investments may be desired for their high returns. This is also the stage when a person buys property (Mortgages) and high investment items (through Home Equity Loans or personal loans). As retirement draws closer, priorities shift towards savings and fixed income investments, like Time Deposits and Certificates of Deposit.