What is The

Difference Between
an Investment Bank
and a Retail Bank?
Agenda

In this presentation, you will learn about:

• Objective of Banks
• Difference b/w Investment Bank & Retail
Bank

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 What is the difference
Between an Investment
Bank and a Retail Bank?

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IB vs Retail Bank

Investment Banking and Retail Banking

• This could easily be asked as an interview question and one that

seemingly causes a lot of confusion for aspirants in the Finance
domain. To help you understand investment banking, it’s best to
differentiate it from the type of banking that you have experience
with: commercial or retail banking – the banks that you see on the
street.

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IB vs Retail Bank

• The banking sector is split into two fundamental

divisions: Investment banking and retail banking.

• Let’s understand what Investment banking is. Investment banks

are huge financial institutions that assist their clients – mostly
corporates and government agencies – in raising capital by
underwriting and acting as the agent or an underwriter in the
issuance of securities.

• An investment bank assists these organizations with complex

financial solutions such as Mergers and Acquisitions, Equity
Underwriting, Private Placement, Valuation and Fairness Opinion,
Corporate Restructuring, Structured Refinance, Management
Buyouts, among others.

• In a way, Investment Banks serve as a bridge between large

corporations and investors.
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IB vs Retail Bank

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IB vs Retail Bank

• Investment banking is split into the front office, middle office, and back
office activities. Think you want to be an investment banker? Chances
are the role you are imagining is a front office role.

• On the other hand, The bank where you maintain your current (UK),
checking (USA) or savings account is a commercial or retail bank. You
cannot go into an investment bank and deposit your money, get your
ATM card, or ask for a student loan.

• This is what commercial or retail banks do. – The value of transactions

that happen in a retail bank is very low in nature but the number of
transactions is significantly higher than those of investment banks
Some retail banks have an investment banking unit, others do not.

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IB vs Retail Bank

• For example, SBI Bank is primarily a Retail Bank and has

established a subsidiary company SBI Cap Securities, which
carries on investment banking operations.

• Retail Banking encompasses a wide variety of products and

services like Savings Accounts, Bank Guarantees, Certificate
of Deposits, Mortgages, Personal Loans, Letter of credits,
Foreign Exchange services for retails clients, Insurance
business, Wealth Management Services, Personal Banking,
Stock Brokerage Services, Locker Facilities etc. which are not
provided by Investment Banks.

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IB vs Retail Bank

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IB vs Retail Bank

• Some of the well-known Investment Banks include:

• JP Morgan and Chase
• Bank of America
• Wells Fargo
• Morgan Stanley
• Some of the well-known Retail Banks include:
• HDFC Bank
• ICICI Bank
• Bank of Baroda
• SBI Bank

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IB vs Retail Bank

• To sum up, here are the key differences between investment

and retail banks:

• Think New Age Banking Career option for you? Interested in

learning more?

• Join Our Retail Banking Training for more detailed

information and further career counseling.

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 Thank you
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