Retailbanking

For the purpose of this research retail banking business is defined as banking business with private customers and smaller corporate customers.

Retail banking business is characterized by a high number of customer relationships, a high repetition rate of identical customer processes as well as by a large number of services rendered annually. More features are large customer potentials, low increase in sales and a high fixed costs block that is caused by branch networks. These attributes are not cumulative, e.g. retail banking business can be executed without a branch network by using the business model of a direct bank.

 

Further attributes to characterize retail banking

In terms of customer segments for the financial service industry both groups are called “private customers” or “retail banking customers”.

The retail banking business has the ability to offer a stable funding source from private customers and to generate appropriate returns. Even if the nominal return per customer might be small, economies of scale effects enable retail banks to generate appropriate returns in this business field in total. Hence the banking business with private customers is an essential strategic business field for many private banks, savings banks as well as for credit cooperatives in Europe. These groups of financial institutions will be described abstractly as “credit institutions” or just “banks” in the questionnaire.

 

Considering the product structure (in terms of objects) retail banking can be divided up into deposit banking, current account business, loan business and securities business.

Note: Retail banking business and its services are very different between various countries. Reasons are for instance regulatory differences or different customer needs. Therefore retail banking systems in different countries might offer different types and levels of financial products and services. For example in the United States “pay by check” is a very important way of transferring money; opposite to this the electronic funds transfer is the major payment system in Western Europe.

 

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