The main characteristic of retail banking , very much similar to retail trade, is that banks directly execute transactions with consumers rather than other banks or corporations. The retail banking is characterized by multiple products, multiple delivery channels and multiple customer segments.
- The multiple products may include financial products such as deposits, insurance products (agency) , investments etc.
- The multiple delivery channels may include customer service centers, internet kiosks etc.
- Multiple customer segments may include the individual customers, small businessmen and corporates.
The main products of the retail banking in India are as follows:
- Deposits products such as flexi deposits.
- Loan products such as housing, auto, education and personal loans
- Card products such as credit cards
- Travel products such as traveler’s cheques etc.
The objective of the retail banking is to increase the penetration. The delivery channels have got various names such as home banking, internet banking, mobile banking, ATM Cards and so on .
- Retail banking provides the banks an opportunity to do cross selling and provide the ancillary services.
What lures the Banks to Retail banking?
The Retail banking offers a promise of low transaction costs, more sale productivity and more convenience in the business. The older banks have already a vast network, but new entrants in the markets have a disadvantage against the established banks. So, retail banking gives them an opportunity to create a customer base and optimum leverage of the resources.