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Investment Banking vs Retail Banking – A Comparative Analysis

The history of banking began with grain loans to farmers and traders, who traded it between different cities. In India bank was incorporated in 1907. The Banyan tree was part of the emblem, denoting progress, growth, and prosperity. Later, the bank was divided into government and private banks with the RBI being the controlling body for all banking systems. Reserve Bank Of India (RBI) is also known as “Bankers Bank” as it controls all the monetary and other banking policies of the Indian Government. Here in this article we will look at Investment banking vs retail banking and analyze the characteristics of the two and the major differences between these two types of banking. 

Investment Banking vs Retail Banking

Investment Banking and Retail Banking are among the few main divisions of the Banking System. They are two different sectors within the broader financial sector. Let us discuss Investment Banking vs. retail Banking:

Investment Banks:

Before we provide a  detailed analysis of Investment Banking vs Retail Banking, let’s first look at what investment banks are. Investment Banks provide a wide range of financial services to governments, corporations, and other institutions and act as a bridge between them and their clients. Investment Banks deal with high-net-value clients and organizations.

Who is an Investment Banker?

An Investment Banker is a financial advisor appointed by many organizations, Private and Public both suggesting clients from Government entities, large companies, equity firms and high-net-worth individuals related to their capital investments. The major responsibilities of an Investment Banker are to invest individuals’ or organizations’ capital in the right manner based on their financial situation, risk tolerance and investment strategy to get profitable returns.

Investment Banking vs Retail Banking – Primary Responsibiloities

Some of the Responsibilities of Investment Bankers Are:

Deal Structuring: To structure financial transactions and to meet the needs and fulfil the goals of their clients. It also deals with financial instruments.

Client Relationship Management: Maintaining a strong relationship with the clients is one of the major roles of an Investment Banker. Understanding and providing services as per their client’s need will help them excel in their job which will also help their company to grow along with giving profitable returns to their clients.

Due Diligence: It helps to identify and assess risks, liabilities and business problems in the target company before finalizing the transaction. Due diligence and its categories are:

  • Legal due diligence
  • Financial due diligence
  • Commercial due diligence

Regulatory Compliance: Investment must ensure that all the transactions comply with relevant financial regulations and legal requirements such as securities and disclosure law.

Financial Modeling: It is a process of creating a summary of a company’s expenses and earnings that is their profit and loss account in the form of a spreadsheet to calculate future decisions. It is the ability to use accounting information and financial documents to create a scene for potential financial decisions. Major components of Financial Modelling are:

Presentations And Pitching: Preparing and delivering presentations and pitching the services and delivering them to the clients is a prime role of an Investment Banker.

Working Hours And Pressure: Investment Bankers must know how to handle high-pressure situations and meet tight deadlines. Long working hours and high pressure are part of the job of an Investment Banker.

Retail Banks:

Retail banking is also known as consumer banking and provides financial services to individual consumers rather than to big institutes, corporations, and businesses.

Who is a Retail Banker?

Retail Bankers also known as customer service representatives work in the retail banking sector and deal directly with individual customers rather than large individuals.

 

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Investment Banking vs Retail Banking – Responsibilities of Retail Bankers Are:  

Customer Service: A customer service executive is responsible for addressing individual queries, and resolving issues with account-related services. Delivering the best customer service to the clients is the primary responsibility of a customer service executive.

Account Management: From the time the account bank account is open, managing all the transactions, and queries till the time a customer opts to close the account for any personal reasons, the customer executive is responsible for managing individual accounts.

Lending Services: Offering loans to small and medium-sized businesses is a part of retail banking services. It includes personal loans, home mortgages, car loans, and small loan businesses.

Deposit Services: Retail banking customers can keep their money safely in these banks and also earn interest on it.

Financial Advice: Advising customers on budgeting, investing in different plans like FD, Mutual funds and saving money in a savings account is an essential role of a Retail Banker.

Cross-selling and Upselling: The Retail Banker is also responsible for advising to invest in banking products and recommending the various plans offered by the bank as per customers’ risk tolerance and capital.

Compliance and Regulatory Adherence: Retail Banks must be updated with changing banking regulations and implement the necessary changes.

Security and Fraud Prevention: Cyber scams have become one of the common online crimes that has looted money from many individuals through one or different online frauds. One of the major reasons these scams take place can be a lack of online education among the customers. One of the vital responsibilities of a Retail Banker is to guide and educate their customers about security practices and fraud detection systems.

Technology Advance: Integrating technology advancements such as online and mobile banking platforms is necessary to have more loyal customers and helps in being competitive in the market.

Financial Inclusions: Offering basic banking products to a wide range of people by providing financial services to underserved populations.

Market Research and Competitor Analysis: Analysing competitors through researching to offer what is required by customers.

Investment Banking and retail Banking are two different segments but one part of the Banking system caters to the needs and different types of clients such as Individuals as well as large businesses.

Below are a few key differences between Investment Banking and Retail Banking :

  • Investment Banking vs Retail Banking #1 – Primary Focus:

Investment Banking mainly focuses on large institutes, corporations, and businesses with high-net value whereas Retail Banking focuses on individual clients and small businesses.

  • Investment Banking vs Retail Banking #2 – Clientele:

Investment Banks are typically large corporations, individual institutes, and government entities whereas Retail Banking has clients such as individual consumers, small businesses and local companies. Retail Banking is for mass.

  • Investment Banking vs Retail Banking # 3 –  – Services Offered:

Investment Banking is involved in mergers and acquisitions, IPOs, financial advice, and trading securities while Retail Banking includes saving accounts, current accounts, loans, credit cards, personal banking experience and mutual funds.

  • Investment Banking vs Retail Banking # 4 –   Risk and Return:

Transaction risk is higher in Investment Banking vs Retail Banking as Investment Banking deals involve more capital and are also expected to have large returns while Retail Banking has low risk as it is likely to more concentrates on stable and consistent income from business like loans, and fees from interest.

  • Investment banking vs Retail Banking  – # 5 – Income structure:

Investment Banking receives income through commission, and trading profits or through facilitating larger financial transactions while Retail Banking receives its income through loans and interest fees.

  • Investment Banking vs Retail Banking # 6 – Regulations:

The difference between Investment Banking and Retail Banking is that investment Banking has regulations for a transparent financial market whereas Retail Banking is subject to consumer protection.

List of few Institutes providing Investment Banking Courses in India and across the globe:

Investment Banking Courses:

1.   IIM SKILLS-

IIM Skills is one of the leading institutes and is globally recognized for its advanced and skilled courses that are prepared by highly trained industry experts. The courses are designed in such a way to meet the standards of market requirements helping its students to excel in their career growth.

Course Fees: INR 39,900 + 18% GST

Highlights Of the Investment Banking Course :

  • 3 Months of online Investment Banking Course
  • 70+ Hours of lecture ( 50+ Hours of training and 20+ Hours of doubt solving)
  • Pay in 7 Interest-Free EMI
  • 100+ Hours of Practical Assignments
  • 1 Month guaranteed internship | 100% job support
  • LinkedIn profile building
  • Mock Interview Preparation
  • Lifetime Support for Resume & Interview Preparation
  • Receive a certificate from IIM Skills which is recognized by MSME
  • Students get access to the recorded videos, course and materials. They also get the opportunity to attend classes from anywhere.

Modules Covered

Module 1MS PowerPointModule 5Technicals of Investment Banking
Module 2MS ExcelModule 6Different Marketing Collaterals
Module 3Financial System and MarketModule 7Technicals of Financial Modeling
Module 4Derivatives MarketModule 8Business Valuation

Benefits of Doing the Investment Course From IIM Skills:

  • Anytime, Anywhere Access
  • Super Interactive Session
  • Flexible scheduling
  • Expert Faculty
  • Learning Resources
  • Master certification
  • Comprehensive Courseware
  • Internship and Placement Support
  • Complimentary Services

 

Module 1- PowerPoint

  • Introduction to MS PowerPoint and ribbon
  • Keyboard shortcuts and their importance
  • Creating, Managing and designing slides
  • Adding transitions and animations
  • Formatting by using themes and colour schemes, And More

Module 2- MS EXCEL (8 Hours)

  • Introduction to MS Excel
  • Keyboard shortcuts and their importance
  • Regular use of functions like concentrate, and their combination among themselves
  • Rules of conditional formatting
  • Font and Number Formatting
  • Concept of cells, rows, and columns
  • Validation and using Excel data, functions as well and formulas
  • Table functions and dynamic arrays
  • Introduction to Micros, And More

Module 3- Financial System

  • Basics of Financial System
  • Different kinds of financial markets, capital markets, and money market
  • Market participants and regulators
  • Stock exchange and Financial centers
  • Equity and preference shares, And More

Module 4- Derivatives Market (2-3 Hours)

  • Introduction to derivatives
  • Forward, future and options
  • Discussion of call and options, And many more

Module 5- Technical of Investment Banking

  • Overview of Investment Banking
  • Role of Investment Bankers
  • Understanding of business
  • Understanding of Mergers and Acquisition
  • Vertical and Horizontal Mergers, And More

Module 6- Different Marketing Collaterals (6-8 Hours)

  • Buyers list or Investors list
  • Non-disclosure agreement (NDA)
  • Pitchbook/ Pitch deck
  • Teaser
  • Confidential Information Memorandum
  • Financial Models
  • Financial Modeling practices and error tracking

Module 7- Business Valuation (4 Hours)

  • Difference between GPC and GTM
  • Difference between deal and transaction value
  • Criteria to screen peers
  • Valuation multiples to be used, And More

Other Professional Courses from IIM SKILLS

Contact details: +91 9580 740 740

Email: [email protected]

Media Coverage

2.   The Wall Street School-

The Wall Street School is a leading Institute for providing Investment Banking courses within India and across the globe. It offers online classes along with offline classes.

Highlights of the Course Are:  

  • Practical training for the participants
  • The training is led by skilled instructors with experience in Investment banks.
  • Case studies and study material used for the course
  • Pay only 40% of the fees on the enrolment and 60% after the successful placement.
  • Believes in transparency with students

The Modules Covered in This Course Are: 

Module 1- Essential to Intermediate Excel: 

  • Usage of the mouse in Excel
  • Sorting data to use advanced filters
  • Using Excel and making the data look meatier
  • Linkages used for financial modeling
  • Simple Excel formulas
  • Match function
  • CAGR Calculation
  • Transpose function
  • Usage of the IF function
  • Table function
  • Pivot function
  • IRR Calculation
  • Cell referencing
  • Interest function as EMI calculator
  • Sum if, Count if, Sumifs
  • Sum product functions
  • Multiple usage of Vlook functions.

Module 2- Excel and PowerPoint: The focus is to use Microsoft Excel for data analysis.

  • Offset function
  • Sensitivity Analysis using different ways
  • Iterative Calculations. How to negate it
  • Using Excel for Statistical Analysis
  • Charting

Module 3- Basic Finance Concepts: 

It covers:

  • 3step and 5step Dupont Analysis
  • Safety analysis and Breakeven point analysis

Module 4-Feasibility Study/Business Modelling:

  • Using different approaches like the lowest common denominator and the value of projects
  • Calculation of free cash flow to firm and free cash flows

Module-5

The following highlights of these points are:

  • Possible reasons for why different companies in the same sector are trading at different multiples and how to analyze those differences before jumping to the conclusions that a particular stock is undervalued or overvalued
  • Role of multiples in IPO valuation
  • Running regression analysis on multiple

Module 6- Discounted Cash Flow Valuation:

  • How to calculate WACC

Module 7- Merger Model: 

  • Everything about the M&A Process
  • Why we need to learn PowerPoint
  • Basics of PowerPoint
  • Learning Letter of Interest
  • Learning Letter of Intent full
  • Learning Merger of Model Basics
  • Merger Model Files
  • M&A Notes

  Module 9- Leveraged Buyout:

  • LBO Model (Valuation)
  • LBO-Transaction assumption
  • LBO-Debt assumptions
  • LBO- Goodwill calculation
  • LBO- Closing Balance Sheet
  • LBO- Income Statement
  • LBO- Balance Sheet
  • LBO- CFS
  • LBO- Key metrics
  • LBO Files

Course Duration:

  • 6 Weeks / 180+ Hours /Mon-Fri/ Rs 45000+GST
  • 2.5 Month weekend/ 120 Hours/ Sat-Sun/ Rs 42000+GST

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 3.   BSE INSTITUTE-

BSE Institute offers multiple world-class courses related to financial markets to guide their students who are interested in upgrading their skills and are up to the market standards. BSE offers an online Investment Banking course for seven months and offers a Master’s program from Mumbai University and PG Certification Programs from many International Universities.

Some Of The Preferred Career Domains are:

Investment Banking can be a rewarding career if you like figures, have a knack for dealing with a client on a day-to-day basis, and help them reach their financial goals.

Private Equity Associate: They are professionals working in the field of Private Equity with a strong background in finance and is responsible for Mergers & Acquisition. Raising capital and using it to acquire or invest in companies to generate higher return values.

Mergers & Acquisition: In this process, one company with high turnover buys another company and becomes one company.

Risk Management: This tool helps organizations to recognize problems and reduce risk by making informed decisions.

IPO: Initial Public offering is a process in which a Private company is acquired by a Public company by sharing its shares with the public for the first time.

Highlights Of The Program:

World-class practitioners are appointed as the faculty who have intensive knowledge of successful teaching methods

Courses are designed as per market requirements and by skilled trainers

Globally recognized certificates

This program will help you get through some of the International Universities

Academic Partners At BSE Institute:

  • Western Sydney University
  • University of Otago
  • HBSU
  • GLA University, Mathura
  • Techno India Group
  • UPES School Of Business
  • Rennes School Of Business
  • Indian Institute Of Technology, Madras
  • Lucens ET Ardens
  • Simon Fraser University
  • University of Canterbury
  • Gannon University
  • Ohio University
  • Techno India Group
  • Chitkara university, Punjab

Eligibility Criteria:

  • Graduates are eligible for this course
  • This program is also designed to help working professionals
  • Final-year students can also pursue this course

Syllabus Included in This Course Are:

Financial Market includes:

  • Financial System
  • Investment Banking
  • Equity
  • Debt
  • Securitisation
  • Money Market
  • Foreign Exchange
  • Commodity Markets
  • Derivatives

Investment Banking includes:

  • Investment Banking
  • Trade Lifecycle
  • Reference Data Management
  • Global Security Operations and Settlements
  • Corporate Actions
  • Collateral Management
  • Reconciliation
  • Assets management

Risk Management:

  • Risk Management
  • DFAST
  • CAR
  • Recovery and Resolution Plan
  • Introduction to Regulators

Contact Details: 1800 22 9030

Retail Banking Courses:

1. Udemy-

Udemy has global recognition for delivering courses online and is a well-known leading online institute for offering various courses across the globe under the guidance of industry experts. They have skilled experts from all over the world who upload their recorded videos on a particular course to help students excel in their careers with the help of these courses. To understand the difference between Investment Banking and retail Banking, below are the modules covering the Retail Banking syllabus:

This Retail Banking training from Udemy will help its learners become analytics minds Retail Bankers.

Syllabus Of The Course:

  • Detailed Coverage of Complete Global Banking Products and Operations
  • Pass Banking Interviews Confidently
  • Deposit Based Products like CASA, Term deposit, and NRI products
  • Credit Officer Roles
  • Fee-based products, Mutual funds, Insurance, Bonds and Gold coins
  • Payment Cards Operation and Technology
  • Retail Credit Assessment
  • Retail Bank Credit Analysis: Home Loan
  • Job Readiness: Resume Building, Interview Preparation, HR & Domain Specific
  • Lots Of Content For JAIIB and CAIIB
  • Banking and Finance
  • Upgrade Your Knowledge
  • Enrich Your CV and LinkedIn Profile
  • Start a Career in NBFCs, Banking and Fintech
  • Become a Banking Interview Ready
  • Branch Banking, Teller, and Relationship Management
  • Branch Officer Profile and Daily Task
  • Alternate Channels Of Banking, ATMs, Phone Banking, Mobile Banking and Net banking
  • Digital Banking: ECS, IMPS, NEFT and RTGS
  • Retail Bank Credit Analysis: Vehicle Loan
  • Pass any Banking Exam Confidently
  • Lots Of Content For IBPS Bank PO and SBI Bank PO Exams in India
  • To learn Credit Analysis in a Simple Manner
  • Banking Fundamentals
  • Skill Enhancement

Highlights Of The Course:

  • On-demand video
  • 4 Articles
  • 14 Downloadable Resources
  • Access on Mobile
  • Certificate Of Completion

Course Fees: INR 449

FAQs About Investment Banking Vs Retail Banking

Q. What is the difference between Investment Banking and retail Banking?

One of the major differences between Investment Banking and retail Banking is:

Investment Banking caters to the needs of large institutes and businesses. It provides capital to these clients who are focused on investing in capital markets whereas Retail Banks provide services and loans to individuals and small businesses.

Q. Is Investment Banking vs. retail Banking part of the same banking system?

Retail Banks earn money through interest charged through loans and by charging fees on various banking products while Investment Banking focuses on Institutional clients and not Individual clients.

Q. Which has a better career opportunity Investment Banking vs. retail Banking? 

The choice between Investment Banking and retail Banking depends on your interests, skills and goals. They both have different opportunities and challenges. Some individuals thrive in the fast-paced and challenging environment of Investment Banking while some prefer stable and customer-oriented Retail Banking.

Conclusions On Investment Banking Vs Retail Banking

To conclude let us take you through a few key differences between Investment Banking Vs Retail Banking. Investment Banking includes providing banking services to large institutes, businesses, and governments whereas Retail Banking believes in offering and creating a positive banking experience for customers, guiding them in their banking transactions, and providing them variety of financial services.

Author:
I am skilled at researching any topic requested and values creating unique yet compelling articles for my clients. My passion for writing content and blogs has motivated me to pursue a career in content writing from IIM Skills. Before this, I have 6+ years of experience in the Banking and Media Industry with EiPi Media, Hindustan Times(Shine.com), Royal Bank of Scotland and Citibank.

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