Retail Banking, also known as consumer banking, is the service provision by a bank to individual customers, rather than to corporations, other banks or companies. Services offered are saving and transactional accounts, personal loans, credit cards, mortgages, and debit cards. The term is generally used to differentiate these banking services from commercial banking, investment banking or wholesale banking. Also, the term may be used to refer to a department or division of a bank that deals with retail customers.
Most consumers use local branch banking services, which offer onsite customer service that satisfy the banking needs of retail customers. Though local branch sites, financial representatives offer financial service and customer advice. Moreover, financial representatives are the lead contact for underwriting
To their products offering, retail banks provide a wider range of services for their retail consumers. In addition to basic customer service and retail banking accounts, banks are adding financial advisors with extended product offerings. For instance, some retail banks are offering investment services such as brokerage accounts, wealth management, retirement planning and private banking.
Fintech and retail banks have complementary strengths which should be leveraged to make a better central financial experience for customers. Banks offer capital and deep customer bases while fintech excel in innovation, agility and exploiting new technology.
Fintech firms are sprouting all over the world and they have come up with Robo-advisers, online wealth advisors, mobile banking, improved and fast payments , easy and inexpensive transfer of money. Consequently, fintech has positively impacted the customer experience in retail banking.
A Robo-advisor offers automated algorithm-based portfolio management advice without using financial planners. Retail banks have adopted this new technology because it requires a lower minimum investment to get started than traditional financial advisors. It also keeps things simple, which is appealing to young investors who are yet to accumulate a lot of wealth.
Many retail banks have also adopted online/mobile banking. Mobile banking enables customers to carry out various financial transactions using a mobile device such as a tablet or mobile phone, using software, commonly known as an app, provided by the bank for that purpose. Banks such as Wells Fargo, BMO Harris, Regions Financial and Needham Bank are allowing their customers to go online to make appointments with bankers offline, therefore, avoiding lobby waits.
Fintech has also improved lending. Nowadays, retails banks are lending directly online or/and facilitating consumer access to credit scoring. Such retail banks are using machine learning technologies and other non-traditional methods to assess creditworthiness.
In addition, retail banks are using fintech to improve the process of money transfer. Fintech companies enable individuals to transfer money and pay bills, often across international borders. They provide cheap and fast money transfer services.
Finally, the global payment sector is in the midst of rapid change as fintech potential to change when, where and how payments are made gains momentum. By failing to keep up with payments innovations, retail banks become utilities and face lower margins. Other great changes in consumer payments have been the move to real-time. This has greatly improved the consumer payment experience.