Types of Banks

Whether public or private, commercial or government or private - there are several types of banks, each handling its own specific role.

There are various types of banks in the world, and each has a certain role to play - as well as a specific domain - in which they operate. Broadly speaking, banks may be classified into several groups on the basis of their activities such as investment banks, private, retail, business, as well as corporate banks. Quite a few larger banks have multiple divisions that cover some or all of the mentioned categories.

• Retail banks: are concerned directly with consumers and small business owners. Their focus lies on mass market products like current and savings accounts, mortgages and other loans, as well as credit cards. Private banks also provide wealth management services to high net worth individuals and families.

   

• Business banks: service the businesses and other organizations that are medium scale

   

• Corporate banks: serve clients who are usually major business entities.

   

• Investment banks: offer their services related to financial markets, for instance, mergers and acquisitions.

Another way in which banks may be classified is on the basis of their ownership. They may be either privately held or publicly owned banks.

• Privately owned banks: are concerned with profits generated from their business operations. These banks are held by the state governments of individual countries and they serve as a nation's centralized bank, and an economic backbone for that particular country. These banks are also called central banks.

   

• Publicly owned banks: are controlled by the government, have several responsibilities that are related to the banking sector of the country, like administering various activities for the commercial banks of that country. They also are responsible for determining the rates of interest offered by banks that are doing business in that country. These banks also play a major role in maintaining liquidity in banking sector.