Mixed Banking:

The banking system that combines deposit banking with

investment banking is known as mixed banking. The mixed
bank receives deposits from public and provides short term,
medium term and long term loan to industries. Mixed banking
system refers to that banking system under which the
commercial banks make long term loans to industry.
In mixed banking, the commercial banks promote the
industrialization of their country and come forward to provide
the initial capital to the newly started industries. Alongside the
task of providing capital to industries, mixed banks also
perform the functions of deposit banks.

Advantages of Mixed Banking System

The following are some of the major advantages of
mixed banking system. :

1. Expert Guidance : The industrial units financed by

the banks have the advantage of receiving their
expert guidance on various financial issues. The
bank helps the industrial co9ncerns in collecting
large financial resources by selling their stocks and
shares to the public.

2. Advice on Investments : Under mixed banking

system, advises on better the banks may give
investments so that the investors may be benefited
by choosing better investment opportunities.
3. Credit Needs : Under the system the banks may
give both short term and long term finance, it can
 satisfy the full credit needs of the industry. They
need not go to other banks for the securing loans.
4. Direct Contact with Industries : When banks
provide long-term finance, directly it can appoint its
official on the board of directors of the company and
they have close intimacy with the company.
5. Rapid Industrialization : In countries where
special industrial banks have not developed, mixed
banking promotes rapid industrialization. Mixed
banking has helped rapid development of industries
in Germany.

Disadvantages of Mixed Banking System

The system of mixed banking also suffers from a few
disadvantages. Those are,

1. Bad debts : The system constitutes a serious

threat to the stability of banks. If the industries
suffer losses due to depressive business, the
profitability of the banks will also receive a setback,
because the banks shall not be able to recover their
loans from the industries during depression period.
2. Speculative Business : During the boom period
the share values of companies will be going up.
Banks engaged in mixed banking may be tempted
to indulge in speculative business liek selling in
company shares. If there is a crash in the stock
market, banks will incur losses.
3. Scope for over lending : When a bank gives long
and short-term finance to industrial concerns it may
leads to scope for over lending.
4. Threat to liquidity : The bank trade with short-
term deposits payable on demand. It is not safe to
 lock up these resources in long-term loans. Long
term financing is a threat to the liquidity of the
banks.

What Is Retail Banking?

Retail banking, also known as consumer banking or personal
banking, is banking that provides financial services to
individual consumers rather than businesses. Retail banking is
a way for individual consumers to manage their money, have
access to credit, and deposit their money in a secure manner.
Services offered by retail banks include checking and savings
accounts, mortgages, personal loans, credit cards,
and certificates of deposit (CDs).

KEY TAKEAWAYS
 Retail banking provides financial services to individual
consumers rather than large institutions.
 Services offered include savings and checking accounts,
mortgages, personal loans, debit or credit cards, and
certificates of deposit (CDs).
 Retail banks can be local community banks or the
divisions of large commercial banks.
 In the digital age, many fintech companies can provide
all of the same services as retail banks through internet
platforms and smartphone apps.
 While retail banking services are provided to individuals
in the general public, corporate banking services are only
provided to small or large companies and corporate
bodies.
Types of Retail Banks:
Retail banks come in a variety of types and sizes, from local
community banks, which are small, locally run banks to the
retail banking services of large, global corporate banks such as
JPMorgan Chase and Citibank.

As of March 31, 2021, the top five largest U.S. commercial

banks by assets were:

 JPMorgan Chase
 Bank of America
 Wells Fargo
 Citibank
 U.S. Bank3

All of these banks offer retail banking services, which is a large

portion of their revenues. Credit unions are another type of
retail bank that works as a non-profit cooperative where
members pool their assets to be able to provide loans and
other financial services to other members. Credit unions
typically provide better interest rates for their members
because they are not corporate entities seeking profits and
they do not have to pay corporate taxes on any earnings.
What Is Wholesale Banking?
Wholesale banking refers to banking services sold to
large clients, such as other banks, other financial
institutions, government agencies, large corporations,
and real estate developers. It is the opposite of retail
banking, which focuses on individual clients and small
businesses. Wholesale banking services include
currency conversion, working capital financing, large
trade transactions, mergers and acquisitions,
consultancy, and underwriting, among other services.

KEY TAKEAWAYS:

 Wholesale banking refers to banking services sold

to large clients, such as corporations, other banks,
and government agencies.
 Typical services sold are mergers and acquisitions,
consulting, currency conversion, and underwriting.
 Wholesale banking is the opposite of retail banking,
which services individuals and small businesses.
 Most standard banks offer wholesale banking
services in addition to traditional retail banking
services.
 Wholesale banking also refers to the borrowing and
lending between institutional banks.
What Is Universal Banking?
Universal banking is a system in which banks provide a wide
variety of comprehensive financial services, including those
tailored to retail, commercial, and investment services.
Universal banking is common in some European countries,
including Switzerland.

Universal banking became more common in the United States

starting in 1999 when the Gramm-Leach-Bliley Act (GLBA)
repealed the restrictions preventing commercial banks from
offering investment banking services. Proponents of universal
banking argue that it helps banks better diversify risk.
Detractors think dividing up banking operations is a less risky
strategy.

KEY TAKEAWAYS:

 Universal banking is a term for banks that offer a variety

of comprehensive financial services, including both
commercial banking and investment banking services.
 Commercial banks typically offer consumer and business
services, such as checking and savings accounts,
business and personal loans (including mortgages and
auto loans), and certificates of deposits (CDs).
 Investment banks provide merger and acquisition services
for corporations, underwriting services, and brokerage
services for institutional and private clients.
 Banks in a universal system may still choose to specialize
in a subset of commercial or investment banking services,
even though they technically can offer much more to their
client base.
How Universal Banking Works;
Universal banks may offer credit, loans, deposits, asset
management, investment advisory, payment processing,
securities transactions, underwriting, and financial analysis.
While a universal banking system allows banks to offer a
multitude of services, it does not require them to do so. Banks
in a universal system may still choose to specialize in a subset
of banking services.

Universal banking combines the services of a commercial

bank and an investment bank, providing all services from
within one entity. The services can include deposit accounts, a
variety of investment services, and may even provide
insurance services. Deposit accounts within a universal bank
may include savings and checking.