Retail and corporate banking

Banks are no longer places where people would go deposit or withdraw their money and that would be
the end of the story. Banks irrespective of their size and span have diversified into many segments. If
one has to broadly classify the activities into categories, then they would mostly come under Retail and
Corporate or Commercial Banking.

Most of us usually who walk into banks hardly focus on the fact that is it a retail branch or a corporate
branch, honestly, most of us might not even know the difference in both. At times even merging
corporate banks definition with investment banking, however, that is an absolutely different end of the
spectrum, where deals like mergers and acquisitions and takeovers are done, basically, it is focused on
top management incorporates.

Let us understand how Retail Banking is Different from Corporate Banking…….

Retail Banking

So, retail banking is generally the face of the bank situated in forms of various branches located across
cities, who deal with daily retail customers, also mostly known as personal banking. These banks or
branches purely deal with retail customer’s, their volumes are large in terms of clientele. You will not
find many banks that purely focus on retail banking. It is interesting to note that retail banking
represents the footing through which funds are collected for most banks.

Corporate Banking

It is mostly referred to as commercial banking as well. Here the bank’s clientele is not individuals but
corporates, irrespective of their size, they could be small as well as large businesses. It is a custom-
tailored finance service designed and personalized for corporates addressing their needs. They offer
more or less the same services as in retail banking but with large volumes matching the cash flow of the
companies they are dealing with. In addition, they also open personal and current accounts offering
mortgages, working capital loans, overdraft facilities and loans to businesses.

The key difference is in the volumes and services offered by Retail and Corporate Banks:

Key Functions of the Retail Banks

There is a large number, a variety of products and services offered by most retail banks. Fundamental
services include a quintessential checking and savings accounts, a line of credit like home mortgages,
vehicle loans, personal loans at high-interest rates. Credit cards, remittance services are a few profitable
offerings that retail banking presents to its clients.

Needless to say, the financial strength of an individual is the deciding factor in the services that will be
offered to the client. If the client is of high potential then the client might be offered a private banker, or
a relationship manager who will manage their banking requirement, however, if the client is of modest
means would need to perform the tasks themselves either through a teller or through the technology
integrated mediums of transactions offered by most retail banks these days, like ATM, Online
transactions, internet banking etc.

Key functions of Corporate Banks

One of the ways that corporate banks can ensure profit is by sanctioning loans and other products of
credit, which become a key factor in corporate banking. Managing the cash flow or the working capital
of the corporate, with Treasury and currency conversion requirements is another area of function.
Corporate banks also structure and customize loans managing the expansion needs of businesses such
as offering equipment loans for the manufacturing clientele. Trade finance, bill collection, credit letters
and payroll are common tasks handled by this sector for the companies they are representing. Some
banks might also offer commercial real estate analysis, portfolio evaluation, debt and equity structuring
as well. Through the commercial banking intervention, banks might also offer asset management to
their clients.

Most large banks have a separate division to handle the retail and corporate function as both these
function guarantee as great profit centers.

The existence of both the wings of banking is essential for the healthy functioning of local and global
economies. While one brings in deposits from personal customers (Retail Banking), which in turn
enables corporate banking to offer expansion assistance to companies, further leading in creating jobs
and aiding the expansion of economies.