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What is Branch Banking?
Branch Banking refers to a bank providing services through a vast network of branch offices across any city or country. For instance, If a bank has twenty branches in a city, then the account holders can choose a nearby branch to make deposits and withdrawals and can avail of other services for their convenience.
Reducing geographical barriers can make banking more accessible and convenient for customers. Financial institutions benefit from branch banking by expanding their services outside their home locations and into smaller storefronts that are extensions of more excellent operations.
It can be a cost-saving method for a few institutions by allowing smaller offices to provide critical services while more prominent and prime locations are additional offerings.
The recent innovations in banking services like mobile and internet banking apps give them a good boost in terms of sales and customers and have dramatically changed the banking landscape.
Retail banking, also known as personal or consumer banking, provides individual consumers with financial services rather than bigger businesses. Retail banking allows individual consumers to manage their money, access credit, and securely deposit it.
Retail banking allows individual consumers the services of saving and transactional accounts, mortgages, personal lending loans, credit cards, debit cards, etc. it is also different from commercial or investment banking. You can also say a division or a department of the bank that deals with individual customers.
Retail banking allows mutual funds, financial products like car loans or home loans, and insurance. It also facilitates the provision of personal credits or loans and mortgages. Most banks focus on retail banking, which helps improve a customer base for selling financial services to the general public.
Nowadays, many fintech companies provide retail bank services through internet platforms and smartphone apps. Retail banking services are specified for individuals, while corporate banking services focus on small or big companies and businesses.
Difference Between Branch Banking and Retail Banking
- Branch banking extends the parent bank’s services to various geographic locations away from its head office. In contrast, retail banking is the essential bank service provided by every bank to its client or the general public.
- Branch banking only offers some of the parent bank’s most prominent or critical services. At the same time, retail banks offer to create checking and saving accounts for customers along with all essential services.
- Branch banks usually deal with big financial institutions like small or big companies or businesses; it is also considered wholesale banking/ In comparison to this, retail banks focus on individuals or the general public and provide them with different financial services.
- The branch banks have limited decision-making powers, while the retail banks can make their decisions independently.
Comparison Between Branch Banking and Retail Banking
|Parameters||Branch Banking||Retail Banking|
|Definition||Branch Banking refers to a bank providing services through a vast network of branch offices across any city or country.||Retail banking, also known as personal or consumer banking, provides individual consumers with financial services rather than bigger businesses.|
|Functionality||Branch Banking offers the services the parent company used to perform in the headquarters. If the parent company is an investment bank, their branch banking will offer the same service.||Retail banking allows individual consumers the services of saving and transactional accounts, mortgages, personal lending loans, credit cards, debit cards, etc.|
|Decision-making||Branch banking has limited rights to make decisions; most decisions are made by the head office and require approval.||Retail banking, as a parent bank, can make its own decisions.|
|Benefits||Offered in branch banking solely depends on the parent’s bank decision.||Retail banks can offer benefits under their directions.|
|Competition||There is significant competition to show results and provide turnover.||Retail banks compete with other banks to acquire customers for different financial products.|
- Blanchard, R. F., and R. L. Galloway. “Quality in retail banking.” International Journal of Service Industry Management (1994).
- Berger, Allen N., and David B. Humphrey. “Measurement and efficiency issues in commercial banking.” Output measurement in the service sectors. University of Chicago Press, 1992. 245-300.