In today's world where innova- tive financial services are be- ing offered, the issue of retail banking is highly crucial and with a lot of potential for growth. Hence, it generates interest for bankers and curiosity for researchers. Retail banking is the chain of products and services offered to individual customers and to those associated with business. Corporate and retail banking offers banking products and services to corporate and retail clients respectively through various channels. A bank's functions are fundamentally divided into two categories, the corporate banking or wholesale banking and the retail banking. On one hand, corporate banking fulfills the financial needs of corporate houses, trusts, academicians, consultants, researchers, companies and other financial institutions. On the other hand, retail banking is a form of mass banking where financial needs of individual consumers such as professionals, salaried persons, self-employed persons, housewives, students, etc., are dealt with. The important characteristic that differentiates corporate banking from retail banking is that in corporate banking, it is the size of the customer's account that matters, while in retail banking, it is the number of customer accounts that counts. In wholesale or corporate banking, the customer is not a surviving entity. The directors of the company operate the corporate account on behalf of the shareholders.
Even the size of the account is large and, sometimes, the amount can be in billions of dollars. The services offered under corporate banking include cash management, general banking and trade finance. Corporate customers from different industries, with a well-defined capital structure, approach the bank for credit. Banks are subjected to high risk when offering credits to corporate customers. Hence, when the amount of loan is very large, banks form a consortium to finance the projects.
On the other hand, in retail banking, banks have transactions directly with customers, instead of corporations or other banks. The products and services under retail banking are designed to meet the financial needs of the customers. The small size of the accounts is less risky and the large number of such accounts is more profitable for the banks. The features and characteristics of retail banking products and services are based on the customer needs and marketing strategies adopted by banks.
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