Retail and Wholesale

Banking
Retail Banking
 Retail Banking refers to financial services
provided to private individuals / families as
opposed to Companies, Governments and
other financial entities like Banks, Insurance
companies, NBFCs.
 Also known as consumer banking , it is in the

context of the consumer being the customer

of the Bank.
Features of Retail Banking
 Multiple product/services to meet financial needs of
consumer
 Standardized products-” off the shelf”

 Inclined towards technology platforms

 Most visible interface with large customer base

 Most stable, low cost funding source for the Bank

 Large number of small value transactions

 Risk Management models (templated)

 Special significance in emerging markets

Increase in Disposable incomes of individuals and GDP growth

from Tier II & Tier III regions in India- pillars of future growth
 Cross sell opportunity
Products of Retail Banking
 On Liability Side of the Bank
◦ Deposits
 Current
 Savings
 Term
 Recurring
 On asset side of the Bank
◦ Loans
 Personal
 Auto
 Housing
 Educational
 Property
◦ Credit Cards
◦ Agri Loans (PSL)
◦ MSME Loans (Individuals) (PSL)
Products of Retail banking continued
 Other services
◦ Depository services
◦ Insurance
◦ Capital markets products
Channels of Retail Banking
 Branches
 Telephone
 ATM
 Call Centre
 Internet banking
 Mobile Banking
 Business Correspondent
 Debit cards/Credits Cards
 Newer products like contactless cards
 Newer products AI/ML linked delivery channels like
Chatbots
Factors determining success of Retail
banking
 Efficient delivery of service, enhance consumer delight
 Matching of products & services to customer Profile &
needs
 Transparency in charges levied
 Use of credit scoring models
 Regulatory Compliance
 Risk Management
 Degree of Financial Inclusion achieved
 Customise product offering to customer using technology
 Reduce Paper work/time taken per transaction
 Partnerships with other entities like Payment banks to
enhance customer base
Challenges in Retail Banking
 Consumer Protection
 Inadequate MIS
 Compliance with KYC & AML
 Risk Management
 Bridge the gap in the consumers’ mind to
embrace technology
 Cost management for delivery channels
 Competition from Differentiated Banks like
Payments Banks, FinTech startups
 Data security
Wholesale Banking
 Wholesale Banking refers to provision of
financial products and services to large and
mid size Firms/companies, government
institutions, other financial institutions,
Pension funds, large corporations
 This section provides specialised products

and services with a view to provide complete

banking solutions to cater to every financial
need of its clients.
Features of Wholesale Banking
 Customised product offering ; bouquet of various
services
 Large value sophisticated deals ; low volume of
transactions
 Risk Management – client wise with specific focus
on the industry
 Delivers volume of source of finance; but not low
cost
 Industry specific inputs
 Complex Regulatory requirements
 Capital Intensive banking
Products of Wholesale Banking
 On the asset side
◦ Working Capital finance
◦ Bill Discounting
◦ Export credit
◦ Short term Finance
◦ Structured Finance
◦ Term lending
◦ Supply chain Finance – dealer finance/vendor finance
◦ Loan to sensitive sectors
 Other services(Non Fund Based)
◦ Bank guarantees
◦ Letters of Credit
◦ Collection of documents
◦ Syndication services
◦ RTGS
◦ Cash management services
Products of Wholesale Banking
◦ Channel Financing
◦ Forex Desk
◦ Money market desk
◦ Derivatives Desk
◦ Investment advisory
◦ Payment gateways
◦ Tax collection and Payments
◦ DP Accounts, Custodial service
◦ Services to Employee Trusts
On the Liability side
Corporate Salary accounts
Reimbursement Account
Bankers to issue/Public Issue
Correspondent Banking
Factors determining success of
Wholesale Banking
 Central pricing team that measures cost based
spread, market sensitivity factors, client
differentiation, Implied spread for the Bank
 Ability to provide industry specific inputs
 Use of Analytics and digital tools for RMs and

Clients
Clients- reduce TATs, improve operational risk
RMs – Performance dashboard, Review operating
figures, Collaboration, Customer Information,
Pricing excellence, Product Knowledge
Challenges faced by Wholesale Banks
 Pressure on lending rates
 Mounting amount of Bad loans
 Increasing Frauds
 Inadequate level of digitalisation while

interaction with Banks

 Loss of opportunity due to corporates lending

from masses
 Data Security