An Investigation Into the Differences Between Retail and Investment Banks

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An investigation into the differences between retail and investment banks

Over the past decades, retail banks have remained the main commercial bank for consumers, rather than corporations or other banks. The investment bank has become more popular amongst individuals, corporations and governments which are interested in raising their profits. Retail banks and investment banks have different organizational structures and activities. So they have many differences, such as services, customers and profits. And this report aims to distinguish between the retail bank and the investment bank in order to identify their specific service areas. Firstly, the author will review some literature focusing on the definitions. Secondly, the author will illustrate the differences between them from their target activities and functions. Retail banks offer a range of services to individual customers and small businesses, rather than to large companies and other banks. These include: savings and transactional accounts, mortgages, personal loans, debit cards and credit cards. An investment bank is a bank which specializes in providing funds to corporate borrowers for startup or expansion and does not accept deposits but provides services to those who offer securities to investors, and to those investors themselves. It may also assist and support companies which are involved in mergers and acquisitions, and provides ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. From the definitions above, it clearly shows that the two types of bank provide substantially different services to customers. As a normal customer, I think the retail banks are better than the investment banks. And there are three advantages of the retail banks. Firstly, the retail banks have more branches than the investment banks. For example, Lloyds TSB Bank is a retail bank in the United Kingdom, and according to Lloyds...
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