Banking Types
You may hear of different types of banks: investment banks, retail banks, commercial banks, online banks, and others. What do all the words mean? Different types of banks specialize in different lines of business. See the basics on each type of bank.Banks come with a variety of names, and one bank can function as several different types of banks. Some of the most common types of banks are:
- Retail bank
- Commercial bank
- Investment banks
Retail Banking
What Does Retail Banking Mean?
Typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).
Typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).
Investopedia explains Retail Banking
Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties (often for regulatory reasons), they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance.
Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties (often for regulatory reasons), they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance.
Commercial Bank
What Does Commercial Bank Mean?
A financial institution that provides services such as a accepting deposits and giving business loans.
Investopedia explains Commercial Bank
Commercial banking activites are different than those of investment banking, which include underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients
Commercial banking activites are different than those of investment banking, which include underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients
Investment bank.
An investment bank is a financial institution that helps companies take new bond or stock issues to market, usually acting as the intermediary between the issuer and investors.
Investment banks may underwrite the securities by buying all the available shares at a set price and then reselling them to the public. Or the banks may act as agents for the issuer and take a commission on the securities they sell.
Investment banks are also responsible for preparing the company prospectus, which presents important data about the company to potential investors.
In addition, investment banks handle the sales of large blocks of previously issued securities, including sales to institutional investors, such as mutual fund companies.
Unlike a commercial bank or a savings and loan company, an investment bank doesn't usually provide retail banking services to individuals.
An investment bank is a financial institution that helps companies take new bond or stock issues to market, usually acting as the intermediary between the issuer and investors.
Investment banks may underwrite the securities by buying all the available shares at a set price and then reselling them to the public. Or the banks may act as agents for the issuer and take a commission on the securities they sell.
Investment banks are also responsible for preparing the company prospectus, which presents important data about the company to potential investors.
In addition, investment banks handle the sales of large blocks of previously issued securities, including sales to institutional investors, such as mutual fund companies.
Unlike a commercial bank or a savings and loan company, an investment bank doesn't usually provide retail banking services to individuals.
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