Banks. These are the brick and mortar buildings that have made our lives easier. To be more appropriate, the banks have made our financial lives easier. We can deposit money in these or take loans or ask for checking account services or mortgages from these banks and do much more stuff.
These banks have also become one of our biggest financial advisors! But although banks have helped us a lot, the are many who do not properly know what are banks or what their types are. So what are these?
WHAT IS A BANK?
This may look as a is question right? But this is a question that most people can’t properly answer. We know about the importance of Banks in our lives. So, we should also know what they basically mean.
Banks are those financial organisations that are certified to receive deposits of money from people and let them borrow money – as loans – for their purposes while charging interests as well. While most of the banks primarily focus on depositing and borrowing money, there are some top private and public sector banks who expertise in other stuff like currency exchange, central duties, financial advising and funding options for your business etc.
So what are the types of banks that can help you with your needs?
TYPES OF BANKS FOR YOUR NEEDS
There are certain types of banks based on their services and so. Here they are –
- Retail Banks
These are the most basic types of banks. These are basically shaker banks and are connected to larger commercial banks. The retail banks are also known as personal banks as they deal with customers individually. These banks mainly provide loans to people directly and also to smaller businesses. And they are of no use to bigger businesses. These are the local banks you visit regularly for your banking services.
Other than loans, retail banks also offer services like financial advising, personal loans and mortgages.
- Commercial Banks
The commercial banks are just a place above the retail banks. These banks have a few extra services to offer. But the basic offerings of the commercial banks are proving loans and accepting deposits. All the other services provided by the commercial banks include personal loans, financial advising, checking account services and certificates of deposits.
These commercial banks primarily offer loans to individuals and small and mid-sized businesses. They funnel the deposits of other customers as per the needs of the individual and then make money by charging interests.
- Cooperative Banks
These are perhaps the most unique of all other banks. The cooperative banks are better controlled by the government nor by any individual. These banks are formed by the union of a group of people. You must have heard of the Bandhan Bank which primarily works for women. It is a cooperative bank.
The cooperative banks provide the financial benefits of both retail commercial banks. But the thing that makes them unique is that the customers of the bank own a particular portion of the bank itself!
- Investment Banks
The investment banks are basically the ones that have been created for the benefit of a large organisation. From the name itself you can tell that these banks help in investment. The investment banks primarily play the role of mediators or financial advisors for various large companies, governments or hedge funds.
The basic work of these banks is to help the bigger corporations in complex financial taking. They do this by helping their particular companies in raising money, providing securities to the public, etc. These make money by charging for their services.
- Private Banks
Private Banks are entirely different from all other banks you will see on this list. These private banks are completely owned by any single wealthy individual or a group of wealthy people working together. And these banks have their own target audience. And this target audience includes someone who is wealthy or is related to someone wealthy by marriage or any relation.
So you can say that private banks work only for wealthy people. And these banks provide a complete package of services more than retail and commercial ones. But the investors may face problems if the owners plan to withdraw from the business. Beware!
- Online Banks
These are probably the best types of banks you will see. From the name itself, you will know that these banks operate online. These online banks are mostly retail ones. And they provide almost all the services that normal retail banks do but from a different perspective. While must of the things we witness have started shifting to the digital world, the banks were not left behind.
And these online banks are very well-liked by their customers as no one likes to stand in a long queue for anything! These banks also offer higher interest rates as compared to others thanks to their low overhead.
- Credit Unions
Credit unions are the rarest types of banks that can be found and are currently limited to some parts of their respective areas. Credit unions are basically a type of cooperative bank but have a different style. These banks are completely owned by the members of the banks. Unlike other cooperative banks, the credit unions are answerable to their members only and work according to government regulations.
The credit union members are its owners as well as customers and have the right to use the income of the bank for providing higher interest rates for savings accounts and lower ones for loans. But they may not provide all the services that other banks provide.
- Savings And Loan Associations
From the name, it may not seem that these are banks. But the savings and loan associations are those financial institutions which work mutually and mainly focus on helping people in buying homes. These institutions were primarily built with a motive of lending home loans to people and encouraging them to buy new homes. But with time, these also started providing offer services like mortgages, checking and savings accounts and personal loans.
These also provide low-interest charges on loans!
These were a few types of banks that can prove helpful in your needy times. Adios!