Retail Banking

What is retail banking?

Banks are really quite odd beasts; they all do more or less the same things, but that doesn’t mean they are all the same!

A bit of theory: banking is about transforming money. In one sense the transformation is between people — banks enable people to exchange value in the form of cash, cheques, card payments, etc.

The other type of transformation is time. Banks are time machines. One of the key functions of a bank is to take our short-term savings and repackage them so they can be used to fund long-term purchases. So the £1,000 you have saved in the bank to pay for your next holiday in three months' time can be converted into a 25-year mortgage for another person by bundling together lots of short-term deposits.

Typically a retail bank will be involved in:

payments — debit cards, cheques, etc;
short-term unsecured loans — such as credit cards;
money management facilities — for example, your current account;
savings — deposit accounts and, increasingly, other forms of savings and investments;
loans — such as car loans;
mortgages.

All retail banks are not the same, but they can be grouped into two broad categories.

Mortgage banks and building societies

These are the 'simplest' of banks, in that their range of services tends to be narrower. Building societies were founded to take deposits and lend money in the form of mortgages. Traditionally, they had limited current account and money management services, instead using major ‘clearing’ banks to access the payments network that allows money to be transferred around the country. As a result, building society cheques were a much slower form of payment than cheques drawn on a bank.

Many building societies have converted from mutually owned organisations (ie owned by the people who saved and borrowed money from them) to commercial, stock-market-listed banks. These banks have extended their range of services and now offer competitive current accounts with associated payment services, credit cards and short-term loans. The remaining ‘proper’ building societies have followed the banks’ lead and extended their own product ranges. Nevertheless, most are still dominated by their mortgage background, and mortgages and deposits are their biggest areas.

Banks that fall into this category include:

Independent retail banks and converted building societies	Former building societies that are now part of larger banks	Building societies	Other mutually owned retail banks
Alliance and Leicester	Halifax (merged with Bank of Scotland to form HBOS)	Nationwide (by far the biggest remaining building society)	Cooperative Financial Services (which includes Cooperative Bank)
Bradford and Bingley	Abbey (now a part of Santander)	Britannia Building Society
Skipton	Woolwich (now a part of Barclays)	Yorkshire Building Society
	Cheltenham and Gloucester (part of Lloyds TSB)	Coventry Building Society
	Yorkshire Bank/Clydesdale (owned by National Australia Group)	Newcastle Building Society

Clearing banks – now often thought of as 'universal' banks

Much bigger than the mortgage banks are the so-called 'clearers'. These banks have traditionally had direct access to the payments network. They were the banks where people had their current accounts, and they would provide loans and payment services. That's why they are called clearers — because they cleared cheques.

These banks have always offered a much more comprehensive range of services than the mortgage banks and building societies because people managed their money through them. Today they offer a whole range of advanced services for sophisticated customers.

It's worth noting, too, that while mortgage banks have moved into the clearing banks’ markets, so these big banks have also moved into the mortgage business — whether by buying mortgage banks or by creating their own mortgage products.

The big clearers are:

HSBC	Which got into this group by buying Midland Bank
Royal Bank of Scotland	Which was a clearer in Scotland, but entered the big league by buying NatWest
Barclays
Lloyds TSB
HBOS	Not a traditional clearer outside of Scotland, but the merger between Halifax and Bank of Scotland puts them in the big league

What makes these banks interesting from a careers perspective is their sheer scope. Basically, if it’s anything to do with banking, then they do it — which means they are a good place to find just about any type of banking job. For example, because of their history in payment processing, not only do they dominate consumer bank accounts, but they also dominate business banking. Few of the smaller retail banks even offer business banking services, leaving these large banks free to offer the same types of service to businesses as they offer to retail customers.

So is there a role for you?

These banks offer jobs at all levels. If you join one of the smaller retail banks, mortgage banks or building societies, your career will be firmly linked to the retail banking business, which in its own right is very complex. They have large and sophisticated mortgage and financial advisory businesses, offering plenty of opportunities to choose between a sales-orientated career, a career in customer services or a career in operations and management.

If you join the retail banking arm of one of the clearers, then you will have the same career path, but you will also have the opportunity to experience banking in other areas. For example, business banking is usually based in large retail bank branches. Many clearers run their business banking arm as part of the retail bank — giving plenty of scope to experience that side of the business. The larger banks also tend to have larger premier and private banking operations for richer customers wanting more complex services.

On the flipside, while the big banks may offer all sorts of opportunities and career options, getting to the top is difficult, and many people will prefer the more manageable scale of some of the smaller institutions.

For details of jobs available in retail banking, go to:

Retail Banking Graduate Entry Programmes

Wealth Management

Operations and Administration

Mortgage Adviser

Financial Adviser

Customer Service and Sales Representative — Call Centre

Customer Service and Sales Representative — Branch

Business Banker

Credit Risk Officer

Compliance Officer

For careers in large clearing banks outside of retail banking, look at: