Retail Banking: How it is different from wholesale banking?

The basic distinctions between retail banking and wholesale banking/Corporate banking are apparent in their target audiences, services offered, customer relationships, and risk profiles.

Retail banking business is targeted at individuals, salaried professionals, micro, small, and medium enterprises, Self Help Groups (SHGs), and Non-Resident Indians (NRIs).

Retail bankers offer a variety of deposit schemes to individuals like SB accounts, current accounts, term deposits, NRO/NRE/FCNR (B) deposits, ATM facilities, debit cards and credit cards, Safe deposit lockers facilities, etc. Besides, they cater various types of fund-based and non-funded credit facilities such as overdraft facility, cash credit facility, foreign exchange facilities, auto loans, personal loans, Home Loans, Gold Loans, Mortgage loans, House Renovation Loans, Home Extension Loans, Small Road Transport operators Loans, equipment finance, loans and advances to agricultural and allied activities, issuance of demand drafts, issuance of bank guarantees, issuance of letter of credit facilities, etc. Customers can also open a Demat account with their bank for holding investments like shares, bonds, government securities, Mutual Funds, Insurance, and ETFs more easily, doing away with the hassles of physical handling and maintenance of paper shares and related documents. Nowadays, banks are active in the sale of gold coins and the distribution of Mutual Funds, Life, General, and Health insurance products for fee-based incomes and facilitating online and mobile banking. Retail banks also build customer relationships through personalised assistance, branch networks, and easy accessibility. Banks today facilitate their customers to do online transactions and also practice digital currencies to make transactions easier.

Wholesale/Corporate Banking:

The target segment for wholesale/corporate banking is large corporates, PSUs, Government, and multinational corporations. Corporate Banking services to non-individual large corporates include account management, payment processing, treasury services, and electronic banking platforms, enabling companies to streamline their financial operations. These Banks provide more specialised and tailored services to suit the needs of larger businesses including corporate lending, working capital finance, trade services, project finance including consortium/syndicated loans, capital market services, treasury management, risk management, and advisory services with superior product delivery, service levels, and strong customer orientation. Corporate bankers work closely with their clients deputing an exclusive relationship manager to understand their business goals and offer custom financial solutions that optimize operations, manage risks, and support growth.

Risk factors:

Retail banks generally deal with many individual customers with a variety of small-scale transactions resulting in more diversified risk exposure. The risk size associated with individual borrowers may be relatively low, but the cumulative risk across the customer base can be significant. Whereas, the financial transactions involved in corporate banking are generally larger, making the potential impact of any adverse event significantly greater.