What is Retail Banking?
Retail banks provide a one-stop shop for consumers looking for financial services products and advice, providing services such as savings and current accounts, credit cards, loans, mortgages and investment products.
Customers historically dealt primarily with a local branch of a larger commercial bank, but interactions are increasingly taking place online and via mobile as technology within the area develops and adapts to consumers changing needs.
The retail and online banking landscape is constantly changing and evolving as new technologies come into play and increased competition, not just from other banks, but also other sources, for example, retailers who are entering the personal finance sphere, gives customers greater choice about where to put their cash
Need to know key terms...
Distribution strategies is becoming something of a buzzword in the retail banking sector as the shifting demands of customers mean that banks need to provide multi-channel sales and service experiences to keep up with the competition. Traditionally products and services were distributed via the branch, but now banks are considering alternative face-to-face channels as well as mobile and online.
Customer centricity is increasingly important to retail banks as the competitive marketplace makes it difficult to retain customers. Being customer centric involves making the customer the focus of all interactions and striving to create a positive experience both at the point of sale and post sale.
Consumer credit risk, the risk that banks could lose out on money due to customers not paying debts including mortgages, credit cards and personal loans, is something that all banks need to keep a close eye on. Banks are looking at new ways of assessing what kind of credit risk people pose and minimising the risk they take on. There are also changes to the regulation of consumer credit to contend with in multiple jurisdictions.
Engagement preferences are something all retail banks need to consider. Improved technology has enabled banks to offer customers many new engagement channels, including online and mobile banking, but it is important to assess which channels customers prefer to use rather than focusing on ones which are less costly or more convenient. For example, while online and mobile banking has increased the number of times people interact with their banks from once a week to nearly once a day, research by Gallup shows that there are still some tasks people prefer to carry out in branch.