Retail Banking Products and Services
Expert-defined terms from the Professional Certificate in Retail Banking course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Automated Teller Machine (ATM) #
Automated Teller Machine (ATM)
An Automated Teller Machine (ATM) is an electronic banking outlet that al… #
Customers can withdraw cash, deposit funds, transfer money between accounts, check account balances, and in some cases, make bill payments or purchase prepaid mobile phone credits. ATMs are available 24 hours a day, seven days a week, providing customers with convenient access to their funds.
Bank Statement #
Bank Statement
A Bank Statement is a record of the transactions that have occurred in a… #
It typically includes details such as deposits, withdrawals, transfers, and fees charged to the account. Bank statements are usually issued monthly and can be provided in paper form or accessed electronically through online banking platforms. Customers can review their bank statements to track their spending, monitor their account balance, and verify the accuracy of transactions.
Certificate of Deposit (CD) #
Certificate of Deposit (CD)
A Certificate of Deposit (CD) is a time deposit offered by banks and cred… #
When a customer purchases a CD, they agree to leave the funds deposited for a fixed period, known as the term of the CD, which can range from a few months to several years. In exchange for committing to the term, the customer receives a higher interest rate. If the customer withdraws the funds before the CD matures, they may incur a penalty.
Checking Account #
Checking Account
A Checking Account is a type of bank account that allows customers to dep… #
Checking accounts are typically used for everyday transactions, such as paying bills, making purchases, and accessing cash. Customers can access their checking account through ATMs, online banking, mobile banking apps, and in-branch services. Some checking accounts may require a minimum balance or charge fees for certain transactions.
Credit Card #
Credit Card
A Credit Card is a payment card issued by a financial institution that al… #
Credit cards offer a convenient and secure way to pay for goods and services both online and in-store. Cardholders can make purchases up to a predetermined credit limit and repay the borrowed amount in full by the due date to avoid interest charges. Credit cards also offer benefits such as rewards points, cashback, and purchase protection.
Debit Card #
Debit Card
A Debit Card is a payment card linked to a customer's checking account th… #
When a debit card transaction is made, the funds are deducted directly from the cardholder's account, unlike a credit card where the amount is borrowed. Debit cards can be used at ATMs, point-of-sale terminals, and online merchants. They offer convenience and security, as well as the ability to track spending in real-time. Some debit cards also offer rewards programs and purchase protection.
Direct Deposit #
Direct Deposit
Direct Deposit is a payment method in which funds are electronically depo… #
It is commonly used by employers to pay employees' salaries, by government agencies to distribute benefits, and by businesses to make vendor payments. Direct deposit eliminates the need for paper checks and provides a fast, secure, and convenient way to receive payments. Recipients can access their funds immediately without having to visit a bank branch or wait for a check to clear.
Electronic Funds Transfer (EFT) #
Electronic Funds Transfer (EFT)
An Electronic Funds Transfer (EFT) is a digital payment method that allow… #
EFTs can be used for various types of transactions, including direct deposits, bill payments, wire transfers, and online purchases. EFTs are processed through the Automated Clearing House (ACH) network, which facilitates the movement of funds between financial institutions. EFTs are secure, efficient, and cost-effective, making them a popular choice for both consumers and businesses.
Interest Rate #
Interest Rate
An Interest Rate is the percentage of the principal amount charged by a l… #
It is commonly expressed as an annual percentage rate (APR) and is applied to loans, credit cards, savings accounts, and other financial products. The interest rate represents the cost of borrowing money or the return on investment for lending funds. Higher interest rates typically indicate greater risk or higher inflation, while lower interest rates stimulate borrowing and spending.
Loan #
Loan
A Loan is a financial product in which a lender provides a borrower with… #
Loans can be used for various purposes, such as purchasing a home, financing a car, funding education, or consolidating debt. The terms of a loan, including the interest rate, repayment schedule, and collateral requirements, are outlined in a loan agreement. Borrowers are responsible for repaying the loan according to the terms to avoid penalties or default.
Mortgage #
Mortgage
A Mortgage is a type of loan used to finance the purchase of real estate,… #
A mortgage allows the borrower to secure the property as collateral for the loan, with the lender holding a lien on the property until the loan is repaid in full. Mortgages typically have fixed or adjustable interest rates and terms ranging from 15 to 30 years. Borrowers make monthly payments that include principal and interest until the mortgage is paid off.
Online Banking #
Online Banking
Online Banking is a digital platform provided by banks and credit unions… #
Online banking services include features such as checking balances, transferring funds, paying bills, depositing checks, and setting up alerts. Customers can access online banking through a bank's website or mobile banking app, using secure login credentials. Online banking offers convenience, accessibility, and real-time account information to help customers monitor and control their finances.
Overdraft #
Overdraft
An Overdraft occurs when a customer withdraws more money from their bank… #
Banks may allow customers to overdraw their accounts up to a certain limit, known as an overdraft limit, and charge fees or interest for the overdraft amount. Overdraft protection programs can help prevent declined transactions and insufficient fund fees by covering overdrafts with a linked savings account or line of credit. Customers should monitor their account balances to avoid overdrafts and associated fees.
Personal Loan #
Personal Loan
A Personal Loan is an unsecured loan provided by a financial institution… #
Unlike a secured loan, a personal loan does not require collateral, but is based on the borrower's creditworthiness and ability to repay. Personal loans have fixed interest rates, fixed monthly payments, and fixed repayment terms, making them a predictable and flexible financing option. Borrowers can use personal loans for a variety of purposes and repay the loan over a specified period.
Savings Account #
Savings Account
A Savings Account is a deposit account offered by banks and credit unions… #
Savings accounts are designed for storing funds for future use, emergencies, or financial goals. Customers can deposit money into a savings account, earn interest on the balance, and make withdrawals when needed. Savings accounts typically have lower interest rates than other investment options but offer liquidity and security. Some savings accounts may require a minimum balance or charge fees for certain transactions.
Term Deposit #
Term Deposit
A Term Deposit , also known as a time deposit or certificate of deposit (C… #
Term deposits require customers to deposit funds for a set term, ranging from a few months to several years, without withdrawing the money before maturity. In exchange for committing to the term, customers receive a higher interest rate than a regular savings account. Early withdrawal of funds from a term deposit may result in penalties or loss of interest.
Wire Transfer #
Wire Transfer
A Wire Transfer is an electronic transfer of funds from one financial ins… #
Wire transfers are secure, fast, and reliable, allowing funds to be sent domestically or internationally. To initiate a wire transfer, the sender provides the recipient's banking information, including the account number and routing number. Wire transfers may incur fees, depending on the sending and receiving institutions. Wire transfers are commonly used for business transactions, real estate purchases, and international remittances.
Retail Banking Products and Services #
Retail Banking Products and Services
Retail banking products and services refer to financial products and services of… #
These products and services are designed to meet the everyday banking needs of consumers, such as savings, checking accounts, loans, credit cards, and mortgages.
1 #
Savings Account
A savings account is a type of deposit account offered by banks that allows cust… #
Savings accounts are typically used to store funds for short-term goals or emergencies.
Example #
Mary opened a savings account to save money for a vacation.
2 #
Checking Account
A checking account is a type of deposit account that allows customers to deposit… #
Checking accounts are often used for day-to-day transactions and bill payments.
Example #
John uses his checking account to pay his monthly bills.
3 #
Debit Card
A debit card is a payment card that is linked to a customer's checking account a… #
When a customer uses a debit card, the funds are immediately deducted from their checking account.
Example #
Sarah used her debit card to buy groceries at the supermarket.
4 #
Credit Card
A credit card is a payment card that allows customers to borrow money from the i… #
Customers must repay the borrowed amount, usually with interest, by the due date to avoid additional charges.
Example #
Jack used his credit card to book a flight for his vacation.
5 #
Personal Loan
A personal loan is a type of loan that is borrowed by an individual for personal… #
Personal loans are repaid in fixed installments over a specified period.
Example #
Emily took out a personal loan to finance her home renovation project.
6 #
Mortgage
A mortgage is a loan that is used to finance the purchase of a home #
The borrower agrees to repay the loan amount, plus interest, over a specified period, usually 15 to 30 years. The home serves as collateral for the loan.
Example #
Mark applied for a mortgage to buy his first home.
7 #
Certificate of Deposit (CD)
A Certificate of Deposit (CD) is a time deposit offered by banks that pays a fix… #
Customers cannot withdraw funds from a CD before its maturity date without incurring a penalty.
Example #
Lisa invested in a CD to earn a higher interest rate on her savings.
8 #
Money Market Account
A money market account is a type of interest #
bearing deposit account that typically pays a higher interest rate than a savings account. Money market accounts may have higher minimum balance requirements and limited withdrawals per month.
Example #
Tom opened a money market account to earn a higher interest rate on his savings.
9 #
Overdraft Protection
Overdraft protection is a service offered by banks that allows customers to over… #
Banks may charge a fee for each overdraft transaction, but overdraft protection helps customers avoid declined transactions and insufficient fund fees.
Example #
Sarah opted for overdraft protection to avoid declined transactions.
10 #
Online Banking
Online banking, also known as internet banking, allows customers to access their… #
Customers can check account balances, transfer funds, pay bills, and set up alerts through the bank's website or mobile app.
Example #
John prefers to use online banking to manage his finances conveniently.
11 #
Mobile Banking
Mobile banking refers to banking services that can be accessed through a mobile… #
Customers can perform various banking tasks, such as checking balances, depositing checks, and transferring money, using a mobile banking app.
Example #
Mary uses her mobile banking app to deposit checks and pay bills on the go.
12 #
ATM (Automated Teller Machine)
An Automated Teller Machine (ATM) is a self #
service machine that allows customers to perform basic banking transactions, such as withdrawing cash, making deposits, and checking account balances. ATMs are available 24/7 at bank branches, retail locations, and standalone kiosks.
Example #
Jack used an ATM to withdraw cash for his weekend trip.
13 #
Direct Deposit
Direct deposit is a payment method that electronically transfers funds directly… #
Employers often use direct deposit to pay employees' salaries, and government agencies use it to disburse benefits, such as Social Security payments.
Example #
Sarah set up direct deposit for her paycheck to be deposited into her checking account.
14 #
Wire Transfer
A wire transfer is a method of sending money electronically from one bank accoun… #
Wire transfers are often used for large or time-sensitive transactions, such as purchasing a home or transferring funds internationally.
Example #
Tom requested a wire transfer to pay for his overseas business trip.
15 #
Automatic Bill Payment
Automatic bill payment is a service that allows customers to set up recurring pa… #
The bank deducts the payment amount from the customer's checking account on the specified due date.
Example #
Emily scheduled automatic bill payments for her monthly expenses.
16 #
Financial Planning
Financial planning is the process of setting financial goals, developing a plan… #
It involves assessing income, expenses, assets, and liabilities to create a strategy for saving, investing, and managing money.
Example #
Mark consulted a financial planner to create a plan for his retirement savings.
17 #
Credit Score
A credit score is a numerical representation of an individual's creditworthiness… #
Lenders use credit scores to evaluate the risk of lending money to a borrower and determine the terms of credit, such as interest rates and loan amounts.
Example #
Lisa checked her credit score before applying for a mortgage.
18 #
Fraud Protection
Fraud protection involves measures taken by banks to prevent and detect fraudule… #
Banks may use security features, such as encryption, monitoring systems, and fraud alerts, to safeguard customers' personal and financial information.
Example #
Tom received a fraud alert from his bank about a suspicious transaction on his credit card.
19 #
Financial Literacy
Financial literacy refers to the knowledge and skills needed to make informed fi… #
It includes understanding concepts such as budgeting, saving, investing, and debt management.
Example #
Emily attended a financial literacy workshop to improve her money management skills.
20 #
Customer Service
Customer service in retail banking refers to the assistance and support provided… #
Good customer service builds trust and loyalty among customers.
Example #
John praised the bank's customer service for resolving his issue promptly.
21. Cross #
Selling
Cross #
selling is a sales technique used by banks to offer additional products or services to existing customers based on their needs and preferences. For example, a bank may suggest a customer open a savings account when they apply for a checking account.
Example #
Mary was offered a credit card when she applied for a personal loan at the bank.
22 #
Fee Schedule
A fee schedule is a list of fees charged by a bank for various products and serv… #
Customers should review the fee schedule to understand the costs associated with their accounts.
Example #
Jack checked the fee schedule before opening a new checking account.
23 #
Regulatory Compliance
Regulatory compliance in retail banking refers to the adherence to laws, regulat… #
Banks must comply with requirements related to consumer protection, data security, and financial reporting.
Example #
Sarah's bank implemented new security measures to ensure regulatory compliance.
24 #
Risk Management
Risk management in retail banking involves identifying, assessing, and mitigatin… #
Banks use risk management strategies, such as credit risk analysis, fraud prevention, and disaster recovery planning, to protect their assets and customers.
Example #
Tom's bank conducted a risk assessment to identify potential vulnerabilities in its operations.
25 #
Digital Transformation
Digital transformation in retail banking refers to the adoption of digital techn… #
Banks use digital tools, such as mobile apps, online platforms, and AI-powered chatbots, to deliver convenient and personalized services to customers.
Example #
Emily's bank launched a mobile banking app as part of its digital transformation strategy.
26 #
Data Analytics
Data analytics is the process of analyzing large datasets to gain insights, iden… #
Banks use data analytics to understand customer behavior, improve marketing campaigns, detect fraud, and optimize business operations.
Example #
Mark's bank used data analytics to personalize offers for customers based on their spending patterns.
27 #
Personalization
Personalization in retail banking involves tailoring products, services, and com… #
Banks use customer data, such as transaction history and demographics, to deliver relevant offers and recommendations.
Example #
Lisa received a personalized email from her bank with a special promotion on a savings account.
28 #
Omnichannel Banking
Omnichannel banking is a multichannel approach that integrates various channels,… #
Customers can access banking services across different channels with continuity and convenience.
Example #
Tom deposited a check using the mobile app and later contacted customer service through the call center, all within the same banking experience.
29 #
Financial Inclusion
Financial inclusion aims to provide access to affordable financial products and… #
Banks offer products, such as basic savings accounts and microloans, to promote financial literacy and inclusion.
Example #
Emily's bank launched a financial literacy program to empower underserved communities with financial knowledge.
30 #
ESG (Environmental, Social, and Governance) Investing
ESG investing considers environmental, social, and governance factors when makin… #
Banks offer ESG investment products, such as green bonds and socially responsible funds, to align with customers' values and promote corporate responsibility.
Example #
Mark invested in a sustainable fund that supports companies with strong ESG practices.
31. Robo #
Advisor
A robo #
advisor is an automated investment platform that uses algorithms to provide financial advice and manage investment portfolios for customers. Robo-advisors offer low-cost, diversified investment options based on customers' risk tolerance and financial goals.
Example #
Lisa used a robo-advisor to build a diversified investment portfolio for her retirement savings.
32 #
Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography for secur… #
Customers can use cryptocurrencies, such as Bitcoin and Ethereum, for online transactions, investments, and remittances.
Example #
Jack invested in cryptocurrency to diversify his investment portfolio.
33 #
Open Banking
Open banking is a system that allows third #
party financial service providers to access customer financial data, with their consent, through APIs (Application Programming Interfaces) provided by banks. Open banking promotes competition, innovation, and personalized financial services for customers.
Example #
Sarah used a budgeting app that integrated with her bank account through open banking APIs.
34 #
Neobank
A neobank is a digital #
only bank that operates entirely online without physical branches. Neobanks offer banking services, such as checking accounts, savings accounts, and payment solutions, with lower fees, faster transactions, and innovative features compared to traditional banks.
Example #
Tom signed up for a neobank account to access mobile banking services with no monthly fees.
35 #
Contactless Payment
Contactless payment is a secure method of making transactions using a contactles… #
Customers can tap or wave their card or device near a contactless reader to complete a payment quickly and conveniently.
Example #
Emily used her contactless card to pay for groceries at the store.
36 #
Biometric Authentication
Biometric authentication uses unique physical characteristics, such as fingerpri… #
Biometric authentication enhances security and convenience for customers.
Example #
Mark used his fingerprint to log in to his mobile banking app.
37 #
Chatbot
A chatbot is an AI #
powered virtual assistant that uses natural language processing to interact with customers and provide instant responses to their inquiries. Banks use chatbots on websites, messaging apps, and mobile banking platforms to assist customers with account information, transactions, and support.
Example #
Lisa used a chatbot to check her account balance and transfer funds to a friend.
38 #
Cybersecurity
Cybersecurity involves practices and technologies used to protect computer syste… #
Banks implement security measures, such as encryption, firewalls, and multi-factor authentication, to safeguard customers' sensitive information.
Example #
Jack received a security alert from his bank about a potential phishing email.
39 #
Digital Wallet
A digital wallet is a software application that securely stores payment informat… #
Customers can use digital wallets on their smartphones or other devices to make payments quickly and securely.
Example #
Sarah added her credit card to a digital wallet for convenient online shopping.
40. Peer #
to-Peer (P2P) Payment
Peer #
to-peer (P2P) payment allows individuals to transfer funds to each other electronically using a mobile app or online platform. P2P payment services, such as Venmo and PayPal, enable users to split bills, pay friends, and make payments without cash or checks.
Example #
Tom sent money to his friend through a P2P payment app for their shared dinner.
41 #
Remote Deposit Capture
Remote Deposit Capture (RDC) is a service that allows customers to deposit check… #
Customers can use a mobile banking app to capture an image of the check and upload it for deposit into their account.
Example #
Emily deposited a check using remote deposit capture from the comfort of her home.
42 #
Personal Financial Management (PFM)
Personal Financial Management (PFM) tools are digital platforms that help custom… #
PFM tools provide insights into cash flow, savings, investments, and debt management.
Example #
Mark used a PFM app to monitor his spending and save for a vacation.
43 #
Financial Wellness
Financial wellness refers to a person's overall financial health and ability to… #
Banks offer resources, such as educational materials, workshops, and financial counseling, to help customers improve their financial literacy, reduce debt, and build savings.
Example #
Lisa attended a financial wellness seminar to learn about retirement planning.
44 #
Relationship Manager
A relationship manager is a bank employee who serves as a primary point of conta… #
Relationship managers provide personalized financial advice, product recommendations, and support to strengthen customer relationships.
Example #
Jack met with his relationship manager to discuss investment options for his portfolio.
45 #
Wealth Management
Wealth management is a comprehensive financial advisory service that helps high #
net-worth individuals and families manage and grow their assets. Wealth managers provide investment advice, estate planning, tax strategies, and retirement planning to help clients achieve their financial goals.
Example #
Sarah consulted a wealth manager to create a customized investment plan for her retirement.
46 #
Estate Planning
Estate planning involves preparing and organizing a person's assets, properties,… #
Banks offer estate planning services, such as wills, trusts, and probate assistance, to help clients protect their legacies and heirs.
Example #
Tom met with an estate planner to update his will and designate beneficiaries.
47 #
Small Business Banking
Small business banking refers to financial products and services tailored to mee… #
Banks offer business checking accounts, loans, credit lines, and merchant services to help small businesses manage cash flow, grow, and succeed.