Retail vs. Commercial Banking: Here’s A Comparative Guide

In the battle for your future career, we have two heavyweight champions in each corner – Retail vs commercial banking.

These two types of banks offer excellent prospects for finance professionals and relationship managers.

They are both large financial institutions that have had a massive, historic influence and dramatically altered the manner in which society functions.

Both are head-to-head when it comes to work opportunities.

So which one holds the knockout punch that wins the match and your interest?

For those outside the finance industry, it could be difficult to understand how retail and commercial banks are different. The banking system has evolved considerably since its early days of deposits and lending. While that practice is more relevant than ever, banks have diversified into offering better services for customers while also playing a strong role in the economic development of the country.

Most of the top players provide retail as well as commercial banking services. However, as a professional, it will help you plan your career in banking if you understand the sharp distinction between the two. This knowledge will help you pick the appropriate qualifications, develop the necessary skills and shape your future goals accordingly.

So let’s take a deep dive into the differences between retail banking and commercial banking.

Retail vs commercial banking: What is retail banking?

If you hold a bank account, then you are a retail banking customer. Also called personal banking, it is a collection of financial services given to customers to manage their money better. Probably one of the oldest forms of banking, there are primitive versions of retail banks dating back over 600 years. However, the official establishment was in the 1920s. Since then, retail banking has grown and evolved into a global phenomenon. Almost every adult citizen in a country possesses a bank account and benefits from the many advantages of holding one. Retail banking works on a one-on-one level with each customer.

Here are a few more functions of retail banking:

• Provides a range of personalised services such as deposits, loans, locker facilities, money transfers, credit cards, foreign exchange and many others.
• The retail bank opens several branches across cities and towns to offer easy access for all customers.
• A retail bank helps individuals and families build a corpus over time through savings and investments.
• Retail banking has an offline presence through bank branches, cheque books and ATMs and an online presence through net banking, mobile apps and digital transactions.
• Individuals can avail of personal loans such as home, car, education, etc.
• The banks offer investment opportunities to customers such as mutual funds and fixed deposits.

Also Read – CFP- Your path to Financial Planning & Retail Banking

Career opportunities in retail banking 

• Relationship Manager
• Branch Manager
• Personal Banker
• Financial Advisor
• Credit Analyst
• Loan Officer
• Wealth Manager

Retail vs commercial banking: What is commercial banking?

Commercial banks are similar to retail banks, as they accept deposits and offer loans. Individuals, families and small businesses often use commercial banks for savings and current accounts. Commercial banks use a portion of the money they collect from their customers and circulate the wealth back into the community. SBI is the biggest commercial bank in India and has contributed significantly towards the country’s economic growth.

Commercial banks in India have worked with the government to financially empower people living in rural or semi-rural areas. This is the main difference between retail banking and commercial banking.

Here are a few more functions of commercial banking:

• Offers financial services such as deposit schemes, business loans, specialised rural loans, credit cards and locker facilities to people from all sections of society.
• Enables rural business development through MSME and SME loans, credit creation and mobilisation of wealth.
• Loans are given to small businesses, start-ups, corporations, entrepreneurs, farmers and rural traders.
• Commercial vehicle funding is given to small-sized companies that require business-related transportation.
• Banks also use funds to finance local and global trade deals.
• Additional services include locker facilities, foreign exchange and credit cards.

Also Read – The Critical Importance of Commercial Banking in India

Career opportunities in commercial banking 

• Relationship Manager
• Branch Manager
• Financial Analyst
• Business Development Manager
• Credit Analyst
• Loan Officer
• Trust Officer

Also Read – 4 Different Types of Commercial Banks and Their Roles in the Economy

Retail vs commercial banking – Differences

Retail vs commercial banking — Similarities 

• Both offer a wide range of similar banking services.
• Job profiles and designations overlap in both banking systems.
• Both systems have public and private banks.
• Retail and commercial banks play a huge role in the country’s economic growth.
• Very often, the same bank brand will have retail and commercial banking services.

How Proschool’s courses can lead to a banking career

There are several job opportunities within the banking sector, and Proschool’s finance courses can make you eligible for many of them. As one of the top coaching institutes in the country, Proschool is known for its high standard of teaching, quality of resources and excellent placement record.

You can enrol in courses such as CFA, CFP, financial modelling or Investment Banking, which gives you the industry skills and financial proficiency to excel in many banking roles. Certified students have taken on jobs such as relationship managers and financial analysts. What sets Proschool apart from other learning centres is the attention to detail and the emphasis on innovation. The professors are finance gurus who have worked in the industry and offer an insider’s perspective to students. They also use modern teaching methods, real-world training techniques and practical applications of relevant finance concepts. Students get an enriched learning experience that leads to better job prospects. The finance industry is evolving at a fast pace. Proschool helps students stay ahead of the curve.

Benefits of learning with Proschool:

• There are coaching centres set up across many cities in India.
• Students also have the option of enrolling for online classes.
• Proschool offers mock tests, practice papers, prep books and customised study plans to help you learn better.
• Students get access to the placement portal that has many entry-level job openings.
• You don’t just learn the course material, but you also learn professional soft skills such as interview etiquette, resume writing methods and enhanced communication.
• Proschool’s courses thoroughly prepare you for a banking career, no matter what you choose when it comes to retail vs commercial banking.

FAQs

• What are the advantages of working in a retail vs commercial bank?

Retail and commercial banks are a great place to work in, due to their large size and wide reach. There are plenty of growth opportunities in both types of banks. You can interact with different people, offer financial solutions, overcome challenges and build a strong work ethic. Other advantages include a good work-life balance, lucrative salaries and loan options.

• What is the main focus when it comes to retail vs commercial banking?

Retail banking is focused on the individual customer. Whereas, commercial banks offer lending services to companies, entrepreneurs, traders and different types of businesses.

• Retail vs commercial banking – what is a better option for my career?

There isn’t much difference when choosing between the two. Both offer similar types of opportunities. It all boils down to where your interests lie, which company you work for and your future goals.

• Can relationship managers work in retail and commercial banking?

Yes. Both banking systems require relationship management to help their customers.

• How do banks affect the country’s economy?

Banks offer individuals and businesses an account to store their savings. This builds wealth for the customer. Then a portion of this capital is used to offer loans and credit services to companies and entrepreneurs. This allows funds to flow smoothly in business communities and mobilises wealth in a country.

Conclusion

When it comes to retail vs commercial banking, there is no clear winner. Both banking systems offer lucrative and stimulating opportunities to finance hopefuls. If you study with Proschool, you can choose either type of banking. Do you want to work with individuals or businesses? That is the main difference between retail banking and commercial banking.