what is wholesale banking 
wholesale banking refers to banking services sold to large clients such as other banks other financial institutions government agencies large corporations and real estate developers it is the opposite of retail banking which focuses on individual clients and small businesses wholesale banking services include currency conversion working capital financing large trade transactions mergers and acquisitions consultancy and underwriting among other services investopedia laura porterunderstanding wholesale bankingin its essence wholesale banking is the financial practice of lending and borrowing between two large institutions the types of services are provided by investment banks that often also offer retail banking this means that an individual looking for wholesale banking wouldn t have to go to a special institution and could instead engage the same bank in which he conducts his personal retail banking the services that are considered wholesale are reserved only for government agencies pension funds corporations with strong financials and other institutional customers of a similar nature it is for entities that require more service than an individual or a small business and one that needs it on a large scale because of the large scale the prices offered for these services are typically lower than what is offered to an individual wholesale banking also refers to the borrowing and lending between institutional banks this type of lending occurs on the interbank market and often involves extremely large sums of money wholesale banking vs retail bankingwholesale and retail banking are distinct sectors within the banking industry catering to different customer segments and needs wholesale banking focuses on institutional clients such as corporations governments large businesses financial institutions and high net worth individuals retail banking focuses on individual customers and small businesses wholesale banking handles large scale financial transactions while retail banking handles small to medium sized transactions including everyday banking activities wholesale banks tend to offer a range of sophisticated financial products and services while retail banks provide standardized banking products and services to individual customers very broadly speaking wholesale banking focuses on building long term strategic relationships with corporate clients on the other hand retail banking emphasizes customer service and building relationships with individual customers retail banking focuses on smaller more standardized transactions with lower risk profiles as such retail banking may be seen as having lower risk as the client base often have less assets or resources despite their differences many banks operate in both sectors providing a diverse range of financial services to cater to a wide range of clients needs many financial institutions offer both retail and wholesale banking for example wells fargo u s bank bank of america and many other large banks supports both industries advantages and disadvantages of wholesale bankingwholesale banking provides a number of benefits not only to financial institutions but also to the customers they serve at the institutional level wholesale banking may also come with a few possible drawbacks the following is a list of some of the drawbacks of wholesale banking a 2023 evaluation of the wholesale banking sector by pwc led to the consulting firm stating the upcoming challenge of the industry is balancing the growing complexities of daily operations within the wholesale banking industry with a focus on the extended time horizons of an enterprise wide transformation 1example of wholesale bankingthe easiest way to conceptualize wholesale banking is to think of it as a discount superstore like costco that deals in such large amounts that it can offer special prices or reduced fees on a per dollar basis it becomes advantageous for large organizations or institutions with a high amount of assets or business transactions to engage in wholesale banking services rather than retail banking services for example there are many occasions when a business with multiple locations needs a wholesale banking solution for cash management technology companies with satellite offices are a prime candidate for these services let s say that a saas software as a service company has 10 sales offices distributed around the united states and each of its 50 sales team members has access to a corporate credit card the owners of the saas company also require that each sales office keeps 1 million in cash reserves totaling 10 million across the business it s easy to see that a company with this profile is too large for standard retail banking instead the business owners can engage a bank and request a corporate facility that keeps all the company s financial accounts wholesale banking services act like a facility that offers discounts if a business meets minimum cash reserve requirements and minimum monthly transaction requirements both of which the saas company will hit it is thus beneficial for the business to engage in a corporate facility that consolidates all its financial accounts and reduces its fees rather than keeping 10 retail checking accounts and 50 retail credit cards open 