What is the difference between retail and wholesale banking?
Wholesale banking refers to banking services sold to large clients, such as other banks, other financial institutions, government agencies, large corporations, and real estate developers. It is the opposite of retail banking, which focuses on individual clients and small businesses.
Retail banks generate revenue by charging customers for services such as overdraft fees, ATM fees, and credit card interest. Wholesale banks, on the other hand, generate revenue by charging fees for services such as underwriting, advisory services, and syndicated loans.
Wholesale banking is the provision of services by banks to larger customers or organizations such as mortgage brokers, large corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, institutional customers (such as pension funds and government entities/ ...
Wholesale deposits are typically larger and more volatile, and have a larger impact on a bank's liquidity and funding costs as they are typically more sensitive (higher deposit beta) to interest rate changes. Retail deposits are further split into transactional and non-transactional deposits.
The key difference between retail and commercial banking is who the products are designed for. While retail banks service individuals, communities, small businesses, and families, commercial banks focus on larger companies, government entities, and institutions.
| Bank Name | City | State |
|---|---|---|
| Bank of East Asia | New York | NY |
| BNY Mellon, National Association (f/k/a Mellon Bank, National Association) | Pittsburgh | PA |
| California First National Bank | Irvine | CA |
| Metropolitan Bank and Trust Company | New York | NY |
Wholesale benefits and challenges
With wholesale distributors having access to wholesale pricing, they can buy goods at a significantly lower rate than retail businesses. The ability to ship out products in bulk also allows them to enjoy lower fulfillment costs.
Retail banking, also known as consumer banking or personal banking, is banking that provides financial services to individual consumers rather than businesses. Retail banking is a way for individual consumers to manage their money, have access to credit, and deposit their funds in a secure manner.
When monetary tightening reduces the retail deposit supply, banks try to substitute the deposit outflows with wholesale funding to smooth their lending.
The retail banking products include checking accounts, credit cards, savings accounts, mortgages, debit cards, home equity loans, CDs, and personal loans.
Is wholesale banking same as commercial banking?
Wholesale Banking includes currency conversions and large-scale transactions. Wholesale banking is also called corporate banking or commercial banking, as opposed to retail banking which involves small customers like individuals.
Retail Deposits Risk
The risk of sudden volume reductions in deposits, or that required deposit rates to maintain volumes will rise unexpectedly in response to market or firm specific events: Unexpectedly large volumes of deposit outflows from individuals, which may create Liquidity Risk.
- Checking account: A checking account is a standard demand deposit account. ...
- Savings account: A savings account is a demand deposit account that earns interest over time. ...
- Money market account: A money market account is similar to a savings account, but customers may write checks to withdraw money.
Wells Fargo & Co (WFC) is a diversified financial service holding company that offers retail and wholesale banking, and wealth management services to individuals, businesses, high-net-worth individuals, and institutions, through its subsidiaries.
Depending on the size of the bank, retail bankers may also serve as bank tellers. As a retail banker, you are the customer's first line of communication with the local branch. Providing excellent customer service is a must.
Retail banks provide safe and secure services to individual customers due to being heavily regulated by the government. Additionally, they offer personalized customer service beneficial in understanding clients' needs.
Broadly speaking, there are three main retail bank types. They are commercial banks, credit unions, and certain investment funds that offer retail banking services.
Wholesale funding is a "catch-all" term but mainly refers to federal funds, foreign deposits, and brokered deposits. Some also include borrowings in the public debt market in the definition.
A wholesaler acts as an intermediary or middleman in the supply chain. The most common example of a wholesaler is a company that purchases completed products from manufacturers then distributes these products to retailers, which then sell smaller quantities of the product to the end-user.
Costco Wholesale is a multi-billion dollar global retailer with warehouse club operations in eight countries.
Is Walmart wholesale or retail?
Walmart Inc is the leading retail chain in the US (by retail sales). The company reported revenues of $611,289 million for the fiscal year ended January 2023 (FY2023), an increase of 6.72% over FY2022.
Sellers on Amazon are also retailers that buy from wholesalers or direct from manufacturers, add a margin and resell the products on Amazon. The main difference is that wholesalers usually buy products in bulk while retailers will buy a small quantity to sell.
In August 2021, Chase announced that it was the first bank to have a retail presence in all 48 of the contiguous United States. The last state in the US to have a Chase branch was Montana, with the branch in Billings the first branch in the state.
The Industrial and Commercial Bank of China Limited is the largest bank in both the People's Republic of China and the world when considering total assets. Among the biggest lenders in the world, ICBC continues to steadily remain near the top, along with the likes of the Bank of America.
Our Retail segment provides U.S. consumers with a full range of financial products and services, as well as access to our award-winning digital banking capabilities and a robust retail banking network.
