This document provides an overview of corporate/wholesale banking and retail banking. Wholesale banking involves providing banking services to large corporations and institutions, including term loans, working capital financing, and advisory services. Retail banking focuses on individual customers and small businesses through products like savings accounts, loans, credit cards, and investment services provided at local bank branches. Factors that contributed to the growth of retail banking include increasing economic activity and purchasing power as well as technological advances. Both wholesale and retail banking play important roles in commercial banking and facilitating the flow of funds between savers and borrowers.

1. Introduction to Corporate &
Retail banking
Prepared By:
Md. Nazmul Hasan
Assistant Professor
Department of Banking and Insurance
University of Dhaka
Email: nhp@du.ac.bd

2. Banking
• Banking: Engaging in the business of keeping
money for savings and checking accounts or
for exchange or for issuing loans and credit
etc.
• Commercial Banking: The traditional role of
the banker as it relates to the taking of
deposits and granting of loans. In doing so, it
just facilitates the fund from savers to users.

3. Commercial Banking
Corporate/Wholesale
Banking
Retail Banking

4. Corporate/Wholesale Banking
• Banking with organizations like large corporate
clients, mid-sized companies, real estate
developers, institutional customers (pension
fund) etc.
• Lending based on strong cash inflow, highly
promising projects, sound balance sheet and
income statement and adequate security .
• Usually large sum of money.
• Company saves, bank still makes handsome
profit.

5. Wholesale Banking (Conti….)
• Prioritized more highly than retail customers.
• Long term trustworthy relationship, advisory
services, growing and partnering together.
• Offering includes fund based service, non-
fund based service, value-added service.
Fund based service:
Term credit, Short-term financing, Working
capital financing, bill discounting, Export
credit, Consortium financing.

6. Wholesale Banking (Conti...)
Non Fund based service:
Bank guarantee, letter of credit, collection of
bill and documents.
Value added service:
Cash management service, wealth
management, financial advisory, channel
financing etc.

7. Wholesale Banking example
Imagine a regional grocery store with 15 branches, Bob's Groceries. Bob's
needs a separate checking account for each of its 15 locations. Bob's also
needs a corporate credit card to access this account for three managers at
each location, totaling 45 cards. Bob's also likes to keep some money in
reserve in a savings account totaling no less than $5M.
Finally, Bob's needs to process credit cards, which means it will need a
merchant account. Instead of walking into local Sue's Bank and opening a
checking account like any person would, Bob's needs a corporate facility
where it can house all of its financial accounts. Ideally, Bob's would like a
discount for the large amount of business it hands this bank. Bob's decides
to work with Sally's Wholesale Bank. Sally's offers much more competitive
fees as long as Bob's maintains at least three accounts and holds more than
$5M in the bank at all times. Bob's agrees, and Bob's and Sally's begin a
wholesale banking

8. Risk of Wholesale Banking
• Large amount of cash in one location so
solvency and soundness of that bank is
important. ( solution: insure fund or further
diversification)
• Compromised credit quality.

9. Retail Banking
• Organized banking services started in 15th and
16th century Europe, when banks began
opening branches in commercial areas of large
cities.
• By the last quarter of 19th century banks were
consolidating their branch networks so that
they could operate in a more integrated
matter.

10. Retail Banking (Conti...)
• Typical mass-market banking in which individual customers use
local branches of larger commercial banks. Services offered include:
• Services includes ATM, internet banking, mobile banking, savings
accounts, current accounts, Certificates of deposit (CDs)/fixed
deposits, home loans, personal loans, car loans, education loans,
commercial vehicle loans, credit card, debit card etc.
• Transactions directly with customers rather than corporations.
• Customer service is the end point of all retail banking services.

11. Retail Banking (Conti...)
• Multiple products, multiple channel of
distribution, multiple customer groups.
• Focuses on individual and small units ,offers a
variety of ways to access on account and manage
money.
• Objective is to provide target customers a full
range of financial products and banking services,
giving the customer a one-stop window for all
banking requirements.

12. Retail Banking Example
Bob arrives at his bank one day to deposit a $2000 paycheck
into his account. He decides to deposit $1000 of the paycheck
into his existing checking account. The other $1000 he
decides to use to open a savings account. Bob sits with a
bank representative who explains the various savings account
options and helps him with opening an account once he's
made a decision.
Additionally, the account representative informs Bob of
retirement plans the bank offers as well as
educational savings plans for his children. Before he leaves,
Bob also takes information on auto loans offered by the bank
since he is considering purchasing a new car. While at the
bank, Bob was able, in one place, to deposit money, open a
savings account and find information relating to banking
products he may need in the future.

13. What factors contributed to Retail Banking?
• Increase in Economic Activity
– When the income rises, changes in tastes, and new technology
and market competition leads to higher economic activity.
• Increase in Purchasing Power
– No income to good income, low income to high income
• Technological Factors: Inceptions of new tech
• Nuclear family concept lead to large savings and large
number of banking services
– Globalisation, women-enrollment in workforce, urbanisation
and cost of living drives the trend for nuclear family
• Decline in interest rate
– Usually interest rate is high for retail loans and thus when it
starts to decline….

14. Challenges for Retail Banking
• Retention of Customers (too many banks for clients
to switch)
• Rising Indebtness (Risking their business due to
credit risk)
• Opportunities and challenges of information
technology.
• KYC issues and money laundering issues (More eyes
on banks: so consider seriously all documents)
• Increased threat of Security Breach (Case of BB)

15. SWOT Analysis: Strength
• Diversified asset portfolio
Improves standard of living
New growth driver
CRM tool
Innovative product development

16. SWOT Analysis of RB: Weaknesses
Excludes Corporate Sector
High Marketing Costs:
 To attract more individual client base requires mass-
marketing
Prompt Changes in technology
Reduces profitability (Per unit services costs more)
Co-ordination Issues

17. SWOT Analysis: Opportunities & Threats
Opportunities:
 Scope for Innovation
 Rise in per Capita Income
 Surprising Economic Growth
Threats:
 Large Disbursement of loan
 Issue of customer Dignity
 Issue of customer Privacy

18. Advantages of Retail Banking:
Resource side:
 Retail deposit are stable. (Forms Core Funds)
 Increases subsidiary business for a bank
 Effective Customer Relationship
Management builds stronger customer base
The idea of cross-selling: Bring customer, support
their causes, promote them to get bigger, they will
ultimately seek more services from banks.

19. Advantages of Retail Banking:
Asset side:
 Better yield and improve bottom line of a bank
 Retail segment is a good avenue for fund deployment
 Help economic revival of the nation through increased
production activities
 Innovative product development (In pursuit of beating
the competition, banks need to innovate its portfolio)
 Improves lifestyle and fulfills aspiration of people
through affordable credit.
 Limited marketing effort in a demand-driving economy

20. Drawbacks of Retail Banking
 Designing a new financial product is costly and time
consuming
 Banks, that are slow in introducing technology based
products, are finding it difficult to retain the customers who
wish to opt for convenient/online banking
 Exploitation of technology in full extent is absent
Competitors hunt to copy once a bank innovate something new
 Monitoring and follow up of huge amount of loan
accounts inducing banks to spend heavily
 Long term loans like house loan due to its long repayment
term in the absence of proper follow up can become NPL.

21. Retail Banking Vs. Wholesale Banking
Customer Segment: Individual vs. institutional
Size of loan: Small/Medium vs. Large
Impact on Net Profit: Depends on volume of
credit and spread
Cost of Deposit: Low cost vs. high cost
Monitoring: Less vs. high
Operational Cost: Expensive vs. inexpensive
Volume of Transaction: Very high vs. low

22. Thanks for your patient hearing!