It is impossible for one bank to provide all the resources necessary to meet the various diverse needs and complexities of the banking world. Therefore, there are many different types of banks throughout the world that specialize in certain functions and on meeting the needs of various customers.
Banks can be categorized according to the services they provide and the type of customers they serve.
Commercial Banks
Commercial banks act as an intermediary between depositors and borrowers. Commercial banks raise funds from depositors and lend those same funds to borrowers.
Commercial banks also provide financial services to businesses including bank accounts, credit and debit cards, deposits and loans and secured and unsecured loans.
Commercial banks also compete with investment banks in money market operations, bond underwriting and offer financial advice.
Examples of Commercial Banks
- Banco Popular North America
- Bank of America
- Bank of New York Mellon Corp.
- BNY Mellon
- Capital One
- Chase Bank USA
- Citibank
- Deutsche Bank Trust Co. Americas
- Goldman Sachs Bank USA
- HSBC Bank USA
Retail Banks
Retail banks are the ones that we are more familiar with. These banks are the ones you visit for your day to day banking needs. They are located downtown and provide basic banking services to individual customers. You can rent a safety deposit box, open checking and savings accounts, apply for a mortgage, or request a bank loan to purchase a car perhaps.
Examples of Commercial Banks
- Citicorp/Citibank
- Chase Manhattan Bank
- Bank of America
- J.P. Morgan
- First Union Corporation
- Bank One
- WellsFargo
Investment Banks
Investment banks are primarily engaged in the financial markets. They are financial institutions that help individuals, companies or governments raise capital by underwriting or acting as an agent in the issuance of securities. They may offer financial advice to companies involved in mergers and acquisitions as well as other financial services such as foreign exchange, commodities and equity securities.
Examples of Investment Banks
- J.P. Morgan Chase & Co
- Goldman Sachs
- Morgan Stanley
- Bank of America Merrill Lynch
- Deutsche Bank
- Citigroup
- Credit Suisse
- Barclays Capital
- UBS
- HSBC
Cooperative Banks
Cooperative banks provide cheap credit to their members and are governed by the provisions of State Cooperative Societies Act. A cooperative bank holds deposits, makes loans and provides other financial services to cooperatives and member-owned organizations.
Credit Unions
Credit Unions are a viable alternative to regular banks. A credit union operates as a member owned financial cooperative offering competitive interest rates to its members. Most offer similar financial services as the regular banks and you can choose to bank online, in branch, or by telephone using your member card. Credit Unions are more community based and their objective is to serve their members rather than being driven by profits. Bank cards can be used at any credit union ATM across the country without additional charges.
| Top Ten Credit Unions Canada |
Top Ten Credit Unions USA |
|---|---|
| Vancity | Navy Federal Credit Union |
| Coast Capital Savings | State Employees Credit Union |
| Servus Credit Union | Pentagon Federal Credit Union |
| Meridian Credit Union | Boeing Employees Credit Union |
| First West Credit Union | SchoolsFirst Federal Credit Union |
| Conexus Credit Union | The Golden 1 Credit Union |
| Steinbach Credit Union | Alliant Credit Union |
| Assiniboine Credit Union | Security Service Federal Credit Union |
| Cambrian Credit Union | Star One Credit Union |
| First Calgary Financial | First Technology Federal Credit Union |
Specialized Banks
Specialized banks offer financial aid to industries, foreign trade, and large turnkey projects that require specialized needs. Some examples of specialized banks include industrial banks, import-export banks, agricultural banks, real estate banks and foreign exchange banks.
Internet Only Banks or Direct Banks
Internet only banks or direct banks are a good alternative to bricks and mortar banks as their low overhead allows them to offer higher interest rates and lower, or no banking fees which make them an attractive option. You still need to do your research though, to make sure you are dealing with a reputable company. Below are a few internet only banks that you might consider.
- Ally Bank
- ING Direct Canada now known as Tangerine Forward Banking
- Connexus Credit Union
- Bank of Internet USA
- Flagstar Bank
- USAA
- Capital One 360
- EverBank
- iGObanking
- FNBO Direct
- GoBank™
Central Banks
Central banks play an important role in the economy of the country. They are the banks that regulate and supervise the banking industry. Central Banks are responsible for setting official interest rates, implementing monetary policy and providing banking services to the government and other banks.
- Federal Reserve System, Central Bank of the United States of America
- The Bank of Canada, Central Bank of Canada
- Bank of England, Central Bank of England
- Deutsche Bundesbank, German Federal bank, Central Bank of Germany
- The Reserve Bank of Australia, Central Bank of Australia
- Banque de France, Central Bank of France
- National Bank of Ukraine, Central Bank of Ukraine
- Central Bank of the Republic of China, Central Bank of China
- Central Bank of Russian Federation, Central Bank of Russia
- Sveriges Riksbank, Central Bank of Sweden
Piggy Bank
Piggy banks have been around for generations as a tool to teach kids about the importance of saving money. Piggy banks make great gifts and heirlooms and are often given as christening or birthday gifts.