It refers to the branch of banking in which banks execute transactions directly with individual customers rather than corporations or entities.
It involves offering of products like credit cards, debit card, mortgages & loans, insurance products, depository services, remittance services etc.
Products
Savings Account
Debit & Credit Card
Home Loan
Personal Loan
Fixed Deposits
Advantages of Retail Banking
Risk is spread across the large customer base
Strong customer loyalty
Mass selling ( large no. of clients )
Ability to select clients using credit scoring system
Disadvantages of Retail Banking
Cost of maintaining branch network is high
Handling large no. of low value transactions
Rapid evolution of new products and technologies
Higher delinquencies especially in unsecured loans
Bank run ( sudden outflow of retail deposits due to loss in faith )
Reasons for growth in this sector
Increased purchasing power of middle class
Mass market banking
Volume driven business
Automation of banking process
Easy and affordable access
Technological innovations
Financial market reforms
Declining interest rates
Engine of economic growth
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