| Banks' activities can be divided into | | | | focus on retail banking: payments, |
| retail banking, dealing directly with | | | | savings products, credits and insurances |
| individuals and small businesses; | | | | for individuals or small and |
| business banking, providing services to | | | | medium-sized enterprises. Apart from |
| mid-market business; corporate banking, | | | | this retail focus, they also differ from |
| directed at large business entities; and | | | | commercial banks by their broadly |
| investment banking, relating to | | | | decentralised distribution network, |
| activities on the financial markets. | | | | providing local and regional outreach |
| Most banks are profit-making, private | | | | and by their socially responsible |
| enterprises. However, some are owned by | | | | approach to business and society. |
| government, or are non-profits. | | | | Building societies and Landesbanks: |
| Central banks are non-commercial bodies | | | | conduct retail banking. |
| or government agencies often charged | | | | Ethical banks: banks that prioritize the |
| with controlling interest rates and | | | | transparency of all operations and make |
| money supply across the whole economy. | | | | only social-responsible investments. |
| They generally provide liquidity to the | | | | Types of investment banks |
| banking system and act as Lender of last | | | | Investment banks "underwrite" (guarantee |
| resort in event of a crisis. | | | | the sale of) stock and bond issues, |
| Types of retail banks | | | | trade for their own accounts, make |
| Commercial bank: the term used for a | | | | markets, and advise corporations on |
| normal bank to distinguish it from an | | | | capital markets activities such as |
| investment bank. After the Great | | | | mergers and acquisitions. |
| Depression, the U.S. Congress required | | | | Merchant banks were traditionally banks |
| that banks only engage in banking | | | | which engaged in trade financing. The |
| activities, whereas investment banks | | | | modern definition, however, refers to |
| were limited to capital market | | | | banks which provide capital to firms in |
| activities. Since the two no longer have | | | | the form of shares rather than loans. |
| to be under separate ownership, some use | | | | Unlike Venture capital firms, they tend |
| the term "commercial bank" to refer to a | | | | not to invest in new companies. |
| bank or a division of a bank that mostly | | | | Both combined |
| deals with deposits and loans from | | | | Universal banks, more commonly known as |
| corporations or large businesses. | | | | a financial services company, engage in |
| Community Banks: locally operated | | | | several of these activities. For |
| financial institutions that empower | | | | example, First Bank (a very large bank) |
| employees to make local decisions to | | | | is involved in commercial and retail |
| serve their customers and the partners | | | | lending, and its subsidiaries in |
| Community development banks: regulated | | | | tax-havens offer offshore banking |
| banks that provide financial services | | | | services to customers in other |
| and credit to underserved markets or | | | | countries. Other large financial |
| populations. | | | | institutions are similarly diversified |
| Postal savings banks: savings banks | | | | and engage in multiple activities. In |
| associated with national postal systems. | | | | Europe and Asia, big banks are very |
| Private banks: manage the assets of high | | | | diversified groups that, among other |
| net worth individuals. | | | | services, also distribute insurance, |
| Offshore banks: banks located in | | | | hence the term bancassurance. |
| jurisdictions with low taxation and | | | | Other types of banks |
| regulation. Many offshore banks are | | | | Islamic Banking |
| essentially private banks. | | | | Islamic banks adhere to the concepts of |
| Savings bank: in Europe, savings banks | | | | Islamic law. Islamic banking revolves |
| take their roots in the 19th or | | | | around several well established concepts |
| sometimes even 18th century. Their | | | | which are based on Islamic canons. Since |
| original objective was to provide easily | | | | the concept of interest is forbidden in |
| accessible savings products to all | | | | Islam, all banking activities must avoid |
| strata of the population. In some | | | | interest. Instead of interest, the bank |
| countries, savings banks were created on | | | | earns profit (mark-up) and fees on |
| public initiative, while in others | | | | financing facilities that it extends to |
| socially committed individuals created | | | | the customers. Also, deposit makers earn |
| foundations to put in place the | | | | a share of the bank’s profit as |
| necessary infrastructure. Nowadays, | | | | opposed to a predetermined interest |
| European savings banks have kept their | | | | |