RETAIL BANK Meaning and
Definition
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A retail bank refers to a commercial bank that provides a wide range of financial services directly to individual consumers and small businesses. It primarily focuses on catering to the general public rather than large corporations or institutional clients. The term "retail" implies that the bank aims to meet the needs and demands of everyday people, offering accessible banking services to the masses.
Retail banks act as intermediaries between individuals and the financial markets, accepting deposits from customers and extending loans for various purposes such as personal, housing, or automobile loans. They typically maintain brick-and-mortar branches where customers can conduct transactions, open accounts, and seek financial advice from trained professionals.
Aside from deposit and lending services, retail banks offer a plethora of financial products, including savings and checking accounts, certificates of deposit, credit cards, mortgages, and insurance products. They also facilitate electronic funds transfers, issue debit and credit cards, and provide other digital banking services such as bill payment and mobile banking applications.
Retail banks generate revenue through interest charged on loans, fees for various services, and profits gained from investment activities. They play a critical role in the economy by mobilizing savings, promoting financial inclusion, stimulating economic growth through lending, and supporting the financial well-being of individuals and small businesses within their communities.
Etymology of RETAIL BANK
The word "retail bank" is derived from the combination of two terms: "retail" and "bank". Here is the etymology of both words:
- "Retail": The word "retail" came from the Middle English word "retenailen", which meant to "cut off or cut small pieces" and referred to the practice of selling goods in small quantities to individual consumers. It originated from the Old French word "retaillier", which had a similar meaning. Eventually, "retail" evolved to refer to the sale of goods directly to the end consumer.
- "Bank": The term "bank" has its roots in the Italian word "banca" or "banco", which referred to the benches that money lenders used to sit on in the marketplace. These benches became associated with money lending, and the term "banca" was later adopted for the institutions where such transactions took place.
