Banks are notorious for coming up with weird and unclear names for the products and services they provide. Take the innocuous term "personal banking," for example. It's so generic as to be almost meaningless.
Today, we'll describe exactly what banks are talking about when they say "personal banking," and we'll explain why it matters to you.
What is personal banking?
When most people think about a visit to the local bank branch, the products and services that come to mind are more or less what encapsulate personal banking. Generally, this means the suite of products that the bank offers to individuals and families to meet their most fundamental financial needs.
The bank will talk about deposit accounts, loans to individuals, and personal investment planning, along with all the transactions that go with those products. When you engage in mobile banking, or when you visit the branch, odds are you're taking part in that bank's personal banking program.
What are the typical products and services associated with personal banking?
The most common personal banking products are related to deposits. Your checking account is a personal banking product. So is your savings account, your money market account, and your certificate of deposit.
Some loan products also fall under the personal banking umbrella. Overdraft lines of credit, mortgages and home equity lines of credit, auto loans, and personal loans are all included.
If a bank offers them, brokerage services to individuals, retirement planning, insurance, and other wealth management products also qualify as personal banking products and services.
What personal banking isn't
Personal banking is, in essence, the bank's products and services targeting individuals and families. Therefore, what it isn't is everything else.
That means business loans are out. Capital markets, investment banking, and corporate finance functions don't qualify, either. Neither do commercial loans, investment real estate loans, or cash management products.
If it happens on Wall Street, it's probably not personal banking.
Don't get caught up in semantics
For bank customers, the term "personal banking" is arbitrary. Some banks call it consumer banking. Others retail banking. In general they all mean the same thing.
Instead of focusing on how a given bank organizes its suite of products, focus instead on the products themselves. Your needs or those of your family will be met by specific products tailored to your specific needs.
If one bank wants to call that product a personal banking product, that's fine. It's equally fine if it's called a retail product or a consumer product. It's six of one, half a dozen of the other. The next time you're at the local branch opening a new account or signing up for a new service, focus on how the product itself helps you achieve your goals. You need not worry what the label the bank puts on it.
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