Most people think that banking is just banking, and they don't realize how many different types of banks exist. Some banks focus on consumer financial services and products while others focus on the needs of businesses from large to small. Many consumers do business with banks that provide universal banking services while many businesses work with merchant banks.
Universal Banking Products and Services
Universal banks offer a wide range of consumer financial products and services. The core of all consumer banking activity is deposits and lending--every universal bank offers checking and savings accounts along with mortgages and even auto loans. Universal banks also offer consumer investment products such as mutual funds and annuities. For high-net-worth individuals, many universal banks offer their clients private banking services
Private bankers offer individuals and families the highest level of service a bank can offer. Private bankers typically offer financial planning services along with sophisticated wealth management solutions. The financial planning services often include retirement and estate planning solutions.
Merchant Banking Products and Services
Merchant banks focus on providing solutions and financial products to midsized and large private and public companies. Merchant bankers not only handle corporate deposits and treasury services but also commercial lending and equipment finance. Investment banking services are typically also offered by merchant banks to allow their clients access to new capital.
Investment banking is the division of merchant banks that handles all mergers and acquisitions and all securities issuance. Mergers and acquisition advice is expensive, and the consulting services merchant banks offer businesses in these areas serves as a profit center for the bank. Merchant banks help companies raise additional capital by issuing new securities such as stocks or bonds.
Traditionally, banks only offered simple depository and lending services. Today, the service and product offerings of banks have become far more diverse.