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