Retail vs Cooperative Banking

DIFFERENCE BETWEEN RETAIL AND COOPERATIVE BANKING

Retail banking 

Refers to the division of a bank that deals directly with retail customers. Also known as consumer banking or personal banking, retail banking is the visible face of banking to the general public, with bank branches located in abundance in most major cities. Banks that focus purely on retail clientele are relatively few, and most retail banking is conducted by separate divisions of banks, large and small. Customer deposits garnered by retail banking represent an extremely important source of funding for most banks.

Products and Services – Retail Banking

Retail banking encompasses a wide variety of products and services, including:

* Checking and savings accounts – customers are generally charged a monthly fee for checking accounts; savings accounts offer slightly higher interest rates than checking accounts but generally cannot have checks written on them.

* Certificates of Deposit and Guaranteed Investment Certificates (in Canada) – these are the most popular investment products with conservative investors, and an important funding source for banks since the funds in these products are available to them for defined periods of time.

* Mortgages on residential and investment properties – because of their size, mortgages account for both a substantial part of retail banking profits, as well as the biggest chunk of a bank’s exposure to its retail client base.

* Automobile financing – banks offer loans for new and used vehicles, as well as refinancing for existing car loans.

* Credit cards – the high interest rates charged on most credit cards makes this a lucrative source of interest income and fees for banks.

* Lines of credit and personal credit products – Home equity lines of credit (HELOC) have diminished significantly in their importance as a profit center for banks after the housing collapse in the U.S. and subsequent tightening of mortgage lending standards.

*...