«These services and products include specialty finance, structured transactions, loan syndications, loan structuring, securitization and project finance, wholesale equities, investment banking and public sector infrastructure financing.» Wholesale banking also refers to borrowing and lending between institutional banks. This type of loan takes place on the interbank market and often involves extremely large sums of money. The wholesale segment works with major clients such as government agencies, financial institutions, large corporations, real estate developers, investors, etc. At the same time, business banking and corporate banking are aimed at businesses. Examples of products and services available to businesses include commercial real estate, trade finance and employer services. For large institutions, ministries, local governments, and large businesses with much greater financial needs, wholesale banking offers essentially the same services, typically at a much lower base price than what is charged for retail transactions. Wholesale banking refers to banking services sold to large customers such as other banks, other financial institutions, government agencies, large corporations and real estate developers. This is the opposite of retail banking, which focuses on individual customers and small businesses. Wholesale banking includes, but is not limited to, currency conversion, working capital financing, significant business transactions, mergers and acquisitions, advisory and underwriting. Wholesale banking includes currency conversions and large-scale transactions. Wholesale banking is also referred to as business banking or commercial banking, as opposed to retail banking, which involves small customers as well as individuals. Essentially, wholesale banking is the financial practice of lending and borrowing between two large institutions. The types of services are offered by investment banks, which often also offer retail banking services.
This means that someone looking for wholesale banking would not have to go to a specialized institution and could instead hire the same bank where they do their personal retail business. Even if the bank charges less than one percent, it will still make a substantial profit and the wholesale customer is satisfied. What is wholesale banking? Wholesale banking refers to the banking services that banks provide to larger customers. Customers are different entities and the list is given below. It contrasts with retail banking, also known as consumer banking, which is the provision of banking services to individuals. Wholesale banks in the UK and US have come under pressure to address concerns that weaknesses in operational resilience could mean that an operational incident has a significant impact on local and global markets, and could boost market confidence. Given the high value and volume of many wholesale banking services, the risk of financial harm to businesses, consumers and markets in general poses a greater challenge for time-sensitive services such as trading book management, compliance with trade clearing obligations and acting as an agent. Simply put, wholesale banking is the financial practice of borrowing and lending money between large institutions on a large scale. Wholesale banking is similar to retail banking – because there are customers, borrowers and lenders – but everything is done on a very large scale. The tailored services offered to large corporate clients or government agencies differ because they need such services. Therefore, through wholesale services, financial institutions give a significant discount on their services to large companies, in exchange for depositing large amounts in their vault. Even if they charge a small amount, it will still make a profit.
Wholesale banking refers to banking services offered only to other institutional clients, large corporations with strong balance sheets, government agencies, local governments and pension funds. For example, there are many occasions when a company with multiple locations needs a wholesale banking solution for cash management. Technology companies with offices are a prime candidate for these services. Let`s say a software-as-a-service (SaaS) company has 10 sales offices in the United States, and each of its 50 sales reps has access to a corporate credit card. The owners of the SaaS company also require each sales office to hold $1 million in cash reserves, for a total of $10 million across the company. It`s easy to see that a company with this profile is too big for standard retail banking. In this video from KPMG UK, Warren Mead, Global Co-Head of FinTech and Head of Challenger Banking at KPMG, talks about the current state of innovation in wholesale banking. The UK`s new position outside the Single Market offers the UK a unique opportunity to review, optimise and strengthen its regulatory framework for wholesale and capital markets.
The simplest way to conceptualize wholesale banking is to think of it as a discount supermarket like Costco, trading in such large quantities that it can offer special prices or reduced fees per dollar.