Though retail banking services are often provided by commercial banks, they are specific to individual consumers, whereas commercial banking refers to financial services provided to both the general public and large corporate clients.
As digital and mobile-first features permeate the banking industry, customers are taking their money into their own hands literally. Here's how important cutting-edge features are for retail customer acquisition and retention:
Within the retail banking industry, there are specialized subdivisions of banks that exist either to offer a smaller more targeted set of products or to serve a specific customer base. Below are three of the most common types of retail banks.
Consumer banks are banks that are primarily focused on accepting deposits and making loans to individual customers.
Cooperative banks are customer-owned and operated for a common purpose
Credit unions are member-owned not-for-profit institutions that provide financial services to their members. Because they are cooperative, credit unions seek to promote the best interests of their members by offering better savings rates, lower loan rates, and fewer fees rather than earning profits.
Retail banking services are typically carried out at local bank branches within communities though many are increasingly offered online as well. Common retail banking services include:
Driven by innovation-friendly regulatory reforms, these companies have especially gained traction in Europe over the last three years, but recent developments suggest these startups are finally poised for the spotlight in the US.
And as a result of flaring competition from neobanks, long-standing incumbents are deploying digital-only retail offerings of their own. Most notably, Goldman Sachs launched Marcus in 2016, an online platform offering highly competitive core products including fixed-rate, fee-free unsecured loans and high-yield savings accounts.
JPMorgan Chase launched its own challenger, Finn, nationwide in 2018, but shuttered the digital bank only a year later, likely because there wasn't significant enough differentiation between Finn and the firm's conventional mobile banking app.
Citi has also stated plans to launch a challenger bank and Wells Fargo is testing its digital offshoot, Greenhouse. So far, incumbent responses to neobanks have been packed with digital features and armed with the resources of their legacy parents, which could give them a considerable advantage over fintechs.
With digital and mobile-first features redefining the banking industry as we know it, it's crucial for top decision-makers in financial services to stay ahead of tomorrow's trends. That's why Business Insider Intelligence is launching Banking, our newest research coverage area, to keep you up to date on the biggest industry shifts and shakeups.
This new offering covers digital transformation across the industry, including consumer and business banking, mobile and online banking, digital account opening, and neobanks.
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