EBI Publications

1 w w w . e b i . g o v . e g Retail Banking Industry Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, and so forth. This sector is a core function of many commercial banks, it is one of the most competitive in the financial services industry. The retail bank of today barely resembles the traditional depository and lending business that formed the backbone of financial systems a hundred years ago. In the past , customers heard from the bank only in the form of monthly statement, loan payment bill or notice of a bounced check. Most customers yielded little profit. Branch staff had little authority except to receive deposits and cash checks. Decisions on loan applications, made by people the customer never met, could take days or weeks. To compete effectively today , retail banks are directed to customer driven future of made-to-order financial products and swifter service. Banks have been forced to completely transform the way that they do business. New products and new services along with new channels for connecting with customers, have been offered to consumers at an unprecedented global consolidation and new sources of competition from other financial intermediaries. The early stages of development in emerging economies are characterized by low penetration of banking services, as the cost of serving the less wealthy typically exceeds the benefits to banks from such service. The result is less opportunity for the underprivileged both to save and to access the more efficient credit facilities of banks. This phenomenon slows economic growth and widens the gap between the various segments of society. Electronic payments and self-service outlets can significantly reduce the client wealth/ income level requirement for banks to profit from them. To compete effectively, banks have become increasingly dependant upon leading-edge technology and costly branch operations. As a result, banks are desperate to amortize the costs of that infrastructure across more Financial Infos Issue Four