What is a retail business?
The standardized retail banking business of the banks
Banks’ retail business is about standard financial products and contracts that are optimised for the mass market and tailored to the end consumer.
The standardised products have the advantage of faster processing and transparency for the end consumer. Every client advisor at a bank branch is thus in a position to submit a suitable offer to the client promptly in line with the client’s wishes and needs and, if necessary, to conclude a contract.
In order to differentiate ourselves from the competition, accompanying offers are made to these standard products, which are intended to give you, the end consumer, an additional benefit. Banks offer new customer bonuses or better conditions for other standard products.
Retail business refers to customers with medium or relatively low incomes. Wealthy or corporate clients are not represented in this sector. Private banking refers to business with wealthy clients, offers individual solutions and thus stands in contrast to retail banking.
Banks use a dense network of bank branches as distribution channels for their retail business. Client advisors play an important role because they represent the bank to clients. They respond to customer needs and offer standard solutions from the product range. In addition, the Internet is becoming more and more important as a sales channel every day, as the end consumer can inform himself comfortably at home and conclude standard contracts online.
A well-functioning service center is a prerequisite for the success of retail banking. Marketing and product management are part of the Service Center and ensure successful advertising and comprehensive, easy-to-understand information about standard financial products for the end consumer.
Also, a good Back office necessary for successful retail business. These include, for example, credit analysts and risk specialists. They ensure the optimisation and adaptation of standard financial products.
The various divisions in the retail business
Deposit business is an important area. If you want to save some of your money, most likely use the typical savings account or call deposit account. These and other accounts, such as pension accounts, current accounts and fixed-term deposit accounts, are on the liabilities side. In some cases, they are a prerequisite for payment transactions. Bank cards and lockers are also part of the deposit-taking business.
The lending and financing business deals with the lending of money. The money invested by customers is lent by the bank to private individuals or companies in the form of loans at an active interest rate. There are cash loans (Lombard loans, overdrafts, etc.), commitment loans (e.g. guarantees) and consumer and mortgage loans for private individuals. Other products include deposits, leasing and export financing. The lending and financing business is the main source of income for retail banking.
A large proportion of all invoices are no longer paid in cash, but booked by a transfer of book money. The payment transactions area includes all transactions for this posting process. These processes are connected internationally via the SWIFT network. The processing is fully automatic.
The investment business is gaining in importance due to the continuing low interest rate policy. Money that you invest in a typical savings account hardly generates any income. Inflation even leads to real losses. Some savers are therefore switching to the investment business. It includes investments in equities, funds, precious metals or other financial instruments. The retail business offers standard products for this purpose, such as securities accounts on.
Conclusion: Employees, representatives, branch networks and the online presence of the retail business are associated with high costs. However, everyday life is no longer possible without retail banking. Through optimization, banks try to create a balanced cost-benefit ratio. Despite the costs, retail business is the most stable and secure source of income for banks.
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