Yes, the most common type of banking is what we know as retail banking, or you can call it something like consumer or personal banking as well. And sure enough, with this type of banking, there are services offered by the banks to the customers that are super common like managing money, access to credit services, deposits, and all that. This type of banking has been going on for quite a while since it is one of the most important types out there, not for big companies or businesses, but for the general public. And that is precisely why we have prepared the post where we talk about the advantages and disadvantages of retail banking so that you can have a good idea of what it is, why it is important, how things work within this particular segment, and things like that. Alright, let’s get going.
Advantages of Retail Banking
1. It Gives Banks a Steady Money Pile
As we already told you, retail banking is for the general public and not for the big businesses or companies out there. This means, when you put your money in your savings account, it is actually the bank that uses that money to help out other people. You know, giving out loans and then earning interest from them, and one share of that is also given to those who have deposited their money in the savings bank account. This is precisely how the retail banking wheel is spinning.
2. It Makes You Feel Like a VIP, Well, Sort Of!
See, when you go to a bank, don’t you feel special, or don’t you feel like the bank people make you feel kinda special? Well, that’s just because they want to keep the customers happy, and that’s why they’re always ready to help you out no matter what. If you’re happy, you’ll stick around longer with them, and that’s ultimately beneficial for the banks.
3. It Keeps Things Safe and Spread Out
It is not like banks just give out loans to super-rich people only, nah, they keep things safe and spread out by giving loans to those who are in need. What’s good with this approach though? Well, the thing is, if something goes wrong with one person, it is not as big of a thing for the bank as it would have been if they had given out a super big loan to only a rich individual.
4. It’s a Chance to Sell You More Cool Stuff
If you think that retail banking is just about letting you access basic banking services, then you’re wrong. You see, banks don’t just let you use their banking services for nothing, they also try to sell you more stuff. And we aren’t talking about in a negative way, they only sell you things/services that are useful to you like a loan, credit card, an insurance policy or something like that.
5. It Helps Everyone Live Better
Live better? How? Well, you see, with retail banking, these banks can give loans to people and they can use this loan amount for various things like buying a house, starting a small business, going to school, and things like that. This is how communities are kept happy and fulfilled by the banks or retail banking in general.
6. It’s Super Easy to Use Anytime
We all know how advanced banking has become nowadays, like these days, if you’re a retail banking customer, you don’t even need to visit a physical bank branch, you can just give them a call, or use their online portal or app to access your bank account or money in no time. This is just truly a 24/7 thing right here.
7. It’s Made Just for You
Nah, it is not just for the rich people out there to get personalized services as a retail banking customer, nah, if you want, banks can tweak things around a bit just for you. Like, they can suggest you correct loan options that are the right size just for you, and they can give you more advice on money management stuff too.
Disadvantages of Retail Banking
1. It Costs a Ton to Keep Running
Retail banking is all about those regular banks we see everywhere, right? But the thing is, running these banks isn’t cheap at all, it costs a lot of money, time, and manpower. As a customer though, you may not care about this, but since we’re talking about the pros and cons of retail banking, we must mention how expensive it is to keep on running a bank or a bank branch.
2. It’s Hard to Keep Up with Tech
Banking is something that is advancing super fast, like, every passing year, there is new tech stuff. Especially when online banking is all the craze these days. And sure enough, if a bank is slow on these things like it doesn’t update itself, then without a single doubt, the customers will be choosing other banks that are keeping up with the tech. No rocket science here.
3. Too Many Choices Out There
Without a single doubt, these days, retail banking is among the most competitive things out there. Like, right now, there are so many banks with all sorts of offers and all kinds of fancy ways to attract customers. So no wonder why it has kinda become super tough just to keep up with this competition, though for us customers, it is a good thing.
4. Bad Guys Love the Internet
Nowadays, most of the banking is happening online, and since not every customer or bank employee is super tech savvy, mistakes happen. And there are so many bad people aka the scammers or hackers that are out there waiting for you to just make these mistakes and they’ll make it worth it for themselves. This is a sad reality nowadays, no two ways about that.
5. Keeping Track of Loans Is a Mess
Sure, loans earn banks interest, but sometimes, these loans that they’re giving out like nothing become a big headache for these banks. Many people out there default on loans sometimes, and that makes things difficult for these banks, not only in terms of losses but also in terms of keeping track of things.
Conclusion
There you have it. Now you know why retail banking is among the most common as well as super important types of banking out there, correct? You’re now free to form your own conclusion about it all, but we hope we gave you an all around perspective on this topic.
