If you’re a startup, looking to expand or are searching for a new banking partner, you may need some help to find what you need.
It’s easy to mix up the four main sectors of banking – retail, commercial, corporate and investment – especially if you haven’t yet investigated what they can offer.
We’ve put together a simple guide to explain more about each banking type and some of the benefits you could offer your business.
What is retail banking?
Retail banking, also known as consumer banking, focuses on serving small businesses and individual customers. The following services can usually be accessed online or at local bank branches:
- Checking accounts for managing daily transactions
- Saving accounts for saving and earning additional interest
- Credit cards and ATM cards
- Personal loans, mortgages and home equity loans
What are the benefits of retail banking?
People can enjoy the following benefits by accessing retail banking:
- Access to multiple services under one roof
- Individual customer services supported by a relationship manager
- Option to use the provider’s services remotely at anytime, anywhere
In today’s digital age, customers rarely need to visit a retail bank in-person, even when it comes to setting up an account, making it much easier to manage and control their money.
What is commercial banking?
Commercial banking provides services to small-to medium-sized businesses and individuals. Depending on the size and type of commercial bank, they tend to offer:
- Business, checking and savings accounts
- Small business loans, lines of credit, equipment financing and more
- Foreign exchange and treasure management services
- Personal loans and mortgage loans
- Debit and credit cards for transactions as needed
What are the benefits of commercial banking?
Businesses that use commercial bank services can receive benefits such as:
- Personalized financial expertise to support business growth
- Credit accessibility for new and expanding business owners
- A wide range of financial products tailored to their individual needs
- Robust risk management services to protect financial interests
- Easy-to-access banking services such as mobile apps, online banking etc.
Commercial banks can serve as a key partner for supporting small business growth, while also enabling owners to manage their own personal finances through a separate account.
What is corporate banking?
Corporate banking involves large scale services that are often integrated with the investment segment of the bank. Services offered typically include:
- Corporate accounts and digital banking
- Fixed asset financing and revolving lines of credit
- Sustainable finance for ecologically focused companies
- Large scale treasury services
- Global trade services for international trade
What are the benefits of corporate banking?
A corporate account boosts a company’s credibility, opens the door to potential investment opportunities and connects them with:
- Bespoke financial solutions for corporate entities
- Access to large-scale funding options
- Professional advisory services for growth and risk management
- Improved efficiency in financial operations
- Support for businesses that operate internationally
While corporate banking operates in a similar way to commercial banking, it focuses more on arranging loans for corporations, financial institutions, and governments.
What is investment banking?
Investment banking is a specialized service used by corporations and governments, offering services such as:
- Underwriting – selling stocks and bonds to raise funds
- Sales and trading – buying/selling shares, bonds and assets
- Merger and acquisition analysis to assist both buyer and seller
- Advisory services – new markets, risk management, changing business models etc.
- Asset management for large firms like person or insurance companies
What are the benefits of investment banking?
The market knowledge provided by investment banks can prove invaluable to large companies, helping to lower risk and increase returns. Their expertise adds benefits such as:
- Raising capital through the issuing of stocks and bonds
- Guiding both parties through the sales and acquisition process
- Offering unbiased financial advice so clients can capitalize on market opportunities
- Managing client risk through strategic financial planning
- Market-specific research and guidance to save client time and resources
Small-to-medium-sized businesses can also benefit from investment banking, which can accelerate growth and boost brand credibility.
Final thoughts
Retail banking is more suitable for everyday individual transactions, allowing you to manage your personal finances. The next step up from this is commercial banking, which also allows for personal accounts, alongside financial support for small-to-medium businesses. Corporate banking facilitates the management and movement of larger sums of money, while investment banking uses market expertise to raise funds, guide acquisitions and trade on their client’s behalf.
