facilities

1. Fundamentals of Financial Services
Banking
Fundamentals of Financial Services

2. Banking: Key Topic Areas
 Retail and Commercial Banking
 Retail Borrowing in Focus
 Interest Rates
 Secured and Unsecured Borrowing
 The Relative Cost of Borrowing
 Investment Banks
 Central Banks

3. RETAIL & COMMERCIAL BANKING
RETAIL BORROWING IN FOCUS

4. Lesson Objectives
By the end of the lesson:
1. Everyone MUST be able to:
• Explain the difference between the role of retail banks and
commercial banks
• List and define 5 types of retail borrowing available to retail
customers
2. Most SHOULD be able to explain the features of each of these
retail borrowing methods
3. Some COULD be able to analyse the advantages and
disadvantages to the customer of these retail borrowing methods

5. Retail Bank vs. Commercial Bank
RETAIL
• Individuals are retail customers.
• Banks that provide these
customers with services are
known as retail banks.
• The purpose of the bank is to
attract deposits from savers and
lend to borrowers.
COMMERCIAL
• This term is mainly used in the
US.
• In the US it encompasses all
banks that engage in attracting
deposit and giving out loans.
• In other countries “commercial”
bank may refer solely to banks
who provide such services to
businesses only (not individuals).
• This is also known as corporate
banking, since the bank is mainly
dealing with corporate entities.
What other expenses may a retail
bank have to pay for before it can
determine its level of surplus?
Do you remember how a bank
generates a surplus?