What is Retail Banking? 🔍

The financial sector is full of much-used but often misunderstood terms, such as "retail banking." So, what is it? How does it work? And what's at stake? Let's find out!

Retail banking: definition

Retail banking, also known as consumer banking or personal banking, refers to banking institutions that provide financial services to the general public, as opposed to investment or merchant banks for large corporations.

Retail Banking enables private individuals, the self-employed, and small businesses to manage their money (deposits, withdrawals, savings, etc.), access payment instruments, and obtain credit.

Retail banks can be local community banks, divisions of large banking institutions, or 100% digital online banks.

How does retail banking work?

In France, retail banking institutions are supervised by the ACPR (Autorité de Contrôle Prudentiel et de Résolution), part of the Banque de France. The ACPR is responsible for managing banking establishments and protecting their customers.

Retail banks operate in much the same way as any other business. The bank's resources consist of its funds, customer deposits, securities issued on the financial markets, and capital raised on the interbank market.

Current and savings accounts are two of the most essential services in retail banking. They enable retail bank customers to deposit and secure their funds and earn interest on their assets. Retail banks also play a crucial role in providing credit to individuals and small businesses, enabling them to make large purchases (houses, cars, equipment, etc.). These forms of credit significantly contribute to the economy by providing liquidity to consumers, thereby promoting growth.

Retail Banking: what's at stake?

Digitizing access to retail banking

Today, consumers overwhelmingly want to manage their banking activities from a single location and prefer to use their mobile apps to do so (Chase survey, 2023). As a result, one of the significant developments in the retail banking sector is the move towards online and mobile banking. To satisfy new customer needs, retail banking institutions are developing more and more digital services (platforms and applications in particular) and enriching them with numerous functionalities.

Thanks to this digitalization, fintechs can now provide the same services as traditional retail banking institutions, provided they have the requisite authorizations.

Expand your product and service offering

Retail banking players need to differentiate themselves to face up to competition from Fintechs and the massive digitalization of the sector. There's no secret: they must broaden their product and service offerings to optimize customer acquisition and loyalty.

By offering new products and services that complement the company's core business, diversification enables it to expand its portfolio of activities and customers:

• Customers benefit from new financial products and services that meet their evolving needs, making them more satisfied and loyal.
• Prospects are attracted by a wide range of banking products and services and are more likely to become customers.

Read also: Banks: how can you diversify your income?

Customize offers

In addition to diversifying services, customers are particularly keen to personalize their retail banking offers. Configuring a credit product, personalizing financial reports, requesting innovative products such as payment cards, etc. Retail banks must adapt to these new requirements and offer more flexible, personalized options.

Gaining agility

Digitization, diversification, and personalization depend to a large extent on retail banking's ability to become more agile, especially when it comes to IT. Indeed, to evolve and meet the challenges of the sector, retail banking must be able to rely on a flexible, modular IT system. In this respect, monolithic legacy core banking systems need to be updated. Instead, we must move towards a new-generation, API-first, modular Core Banking Platform to ensure agility and scalability.

Read also: When modernizing core banking becomes an imperative...

So, to meet all the challenges it faces, retail banking needs to embrace technological modernization. And what better way to do this than with the Skaleet solution?

Skaleet, an ally for retail banking players

Reliable, secure, and remarkably flexible, Skaleet's new-generation core banking system offers you increased efficiency and many innovative opportunities. Our aim? To provide your customers with an ultra-personalized experience.

With the Skaleet solution, you benefit from the following:

• A modular API-first architecture that allows connection to Best-of-Breed partners and the development of new components.
• An ISO/IEC 27001-compliant and PCI-DSS-certified platform that guarantees the security of your sensitive information and your regulatory compliance.
• Time to Market is 4x faster than the market average, thanks to its modular, microservice architecture that is both robust and scalable.
• A Continuous Delivery solution that ensures the ongoing evolution and enhancement of the platform: Skaleet is enriched every two months, so you always have access to new possibilities.
• A scalable, cloud-agnostic

With Skaleet, you become the architect of your business and build your innovative ecosystem within Retail Banking. So get in touch!