What is Retail Banking?

Retail banking in India has grown in leaps and bounds in the recent past. Not long back, the entire world economy was gripped in a spiralling recession which emanated from the sub-prime housing crisis in US. Emerging markets which were not heavily dependent on US for growth were the first ones to walk away from the shadow of recession. This fuelled consumption in these economies which set stage for the enormous growth seen in retail banking space. In India, the success of  retail marketing can be attributed to favourable demography, growth of personal wealth, change in spending patterns and behaviour of the largely young population, steady development in IT space, financial reforms, stable government and populist policies of the new government. These factors were enough to boost the growth in any economic segment in an economy which is poised to grow as seen by many international organisations and countries.

Retail banking which is also called a Personal banking. It stands for banking services in which banks cater to individual customers and offer services like savings accounts, transactional accounts, mortgages, personal loans, debit and credit cards. The term was introduced to differentiate between different banking services like investment banking, commercial banking, etc. These banking services are not restricted to specific banking branches or ATMs but are also extended to internet, mobile-banking space etc. It is divided into two types-

  1. Mass retail banking where banks offer standardised products and services to its customers.
  2. Class retail banking where banks offer customised products and services tailor-made for a niche segment of customers.

Relevance of Retail Banking

Retail banking has become hugely relevant in today’s banking space. It has become possible as it has generated many loyal customers due to excellent services, well spread interests, diversified risks and less volatile environment. Despite the tremendous growth, there are some drawbacks too. These are generally related to maintaining customer protection, privacy, KYC norms, coping with high maintenance costs, increased dependence on plastic money, competition from disruptive and newer technological developments.

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