What is Personal Banking: Types, Benefits and Services
Personal banking typically includes checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). Mortgage loans, credit cards, overdraft lines of credit, auto loans, and personal loans are all examples of personal banking.
When you use mobile banking or go to a branch, you become a part of the concerned bank’s personal banking programme.
Continue reading about personal banking and the services that fall under its bracket.
Types of Personal Banking
Here are a few types of personal banking services:
- Account Opening and Closing: You can open various types of accounts – fixed deposits, FCNR, recurring deposit, savings account, current account, etc., through a bank’s personal banking services. Similarly, you can use personal banking services to close an account or withdraw money from an account.
- Chequebook Service: You can either walk into a bank or request a new cheque book via online banking. If you’re applying through netbanking, banks would deliver/issue your cheque book at your doorstep within 3-4 business days.
- Bill Pay and Recharge: Several Indian banks offer bill payment and recharge services through their personal banking service. You can pay the following through bill pay and recharge service – Electricity Bills. Telephone and Mobile bills, Prepaid DTH/ Mobile Connection/ Data Card Recharge, Gas Bills, Mutual Funds payment, Insurance Premiums, Subscriptions., Contribution to Charities, etc.
- Funds Transfer: One of the primary personal banking services that strives to offer convenience when it comes to transferring money – whether within the bank or to another bank. Through this service, you can opt for IMPS (instant transfer), NEFT (transfer to another bank and credit card payment), RTGS (other bank transfers), etc.
- Check Account/Transaction History: In case you want to check whatever transactions you made in a particular month or want to download your lifetime transaction history, you could do so with this service. It helps you keep a check on your cash outgo.
- Transactional Services: This would include money transfer, paying your credit card bills, setting up standing instruction, auto-debit via netbanking, bill payment, etc. This service makes it more convenient for customers to seamlessly pay their bills.
- Netbanking: Although the above services could be availed of through netbanking as well, however, in a broader perspective, netbanking should be called out as an individual service that has made the personal banking segment a lot more accessible. Now you can pay bills, manage accounts, invest, get loans, etc., on the go via net banking services. This has made personal banking far more accessible and less time consuming – all you need is a phone and internet and a netbanking account to avail of this service.
There are other personal banking services like TDS enquiry, loan account statement, debit/credit card upgrade facilities, linking your credit card to UPI , PAN-Aadhaar linking, etc.
What are the Common Personal Banking Products?
Both fixed and recurring deposits, along with savings and current accounts are the most common personal banking products. Individual brokerage services, retirement planning, insurance, and other wealth management products qualify as personal banking products as well.
Let’s discuss some of the personal banking products in detail.
1. Bank Account
Banks offer savings/salary and current accounts as a personal banking product. Current accounts are available to those who run a business or are self-employed (professionals). Both have different terms and conditions. Saving accounts, in general, are personal accounts that allow you to save your money more efficiently. Savings account holders typically have access to a variety of personal banking benefits with services, including:
- Contact the call center
- Banking on the go
- Banking via the internet
- Managers of relationships
- Banking over the phone
- Banking via video
- Direct Selling Agent
You can earn interest over the amount deposited in a savings account. The interest rate usually ranges between 2.5% to 5% p.a. based on the sum deposited.
Aside from savings accounts, there are several types of bank accounts available. Each of these accounts are customised to serve a specific purpose and varies from bank to bank. Some of the examples of other bank account variants are salary account, child education plan (minor account), pension account, Exchange Earners’ Foreign Currency Account, etc.
Also Read: What is Mobile Banking and What are the Types of Services Offered?
2. Cards (Debit/Credit)
Debit and credit cards have been a revelation in the Indian banking system. Before the staggering rise of UPI transactions (some banks are already providing UPI-related services), debit cards used to be the go-to option for most customers with respect to online transactions or in-store purchases.
Similarly, credit cards powered by Visa or MasterCard got the attention of customers for their ease of use and the benefits they carry. In fact, credit card offers like air miles, cash back and reward points proved to be immensely beneficial to many consumers. Also, convenience was a huge factor here considering these cards enable you to purchase an item and pay the amount via EMIs.
Banks and other fintech players realised that there’s a huge scope in the credit card segment. This transpired into the introduction of different credit card variants serving different purposes. Also, players in the personal banking sector started rolling out other types of cards like prepaid cards, commercial cards, Unifare Metro Cards, travel cards, and so on.
3. Deposits
The two most popular deposit accounts are fixed deposit and recurring deposit. Both the deposits let you earn a fixed interest rate for a pre-decided tenure. However, FDs offer higher rates of interest than RDs and come with tax-saving benefits under Section 80C. FD tenure can range anywhere between 7 days and 10 years, whereas for RDs, the minimum tenure is 6 months.
There are other deposit services offered by banks that cater to NRIs (Non-Resident Indians) like FCNR, NRE and NRO accounts. Each of these accounts come with their own set of purposes and benefits with varying rates of interest.
4. Loans
Loans and cards are the two most popular revenue churns for banks. Most banks offer home loans, personal loans, two-wheeler loans, vehicle loans, and loans against property. Each of these loans caters to different needs. The interest rates, loan amount and tenure also vary as per the type of loan.
5. Mutual Fund
Several banks have their own AMC (Asset Management Company) through which investors can handpick their choice of mutual funds to invest in based on their financial goals.
6. Insurance
Like mutual funds, most banks have their separate insurance arm. Customers can sign up for a policy based on their requirements.
Benefits of Personal Banking
1. Manage Your Finances Efficiently
Visibility, access, and functionality are required for effective financial management. Banks provide you with full control over your funds by offering customized account options and online and mobile management tools. That means you’ll be able to direct your money, monitor it in real-time, and make changes on the fly.
2. Helps Keep Your Spending and Savings in Order
You can use your accounts to track your spending, save money, and improve your overall financial health. You can track your expenses via transaction history and plan your finances accordingly. To maximise on your savings, you can set up a recurring deposit or a fixed deposit account.
3. Saves Time
Personal banking services like netbanking have made personal finance products and services all the more accessible to consumers. Thanks to netbanking, you don’t have to pay a visit to the bank to open an account or to transfer money. All of this and more could be done through netbanking.
4. Other Offers
Banks roll out exciting offers and deals periodically. These could be in the form of pre-approved loans, low-interest rate loans, pre-approved cards, credit card limit upgrade, instant loans, discounts on brands, cashback and reward points on select items, etc.
Also Read: What Is Electronic Clearing Service (ECS) In Banking And How To Set Up ECS Mandate?
Things to Keep in Mind about Personal Banking
Here are a few things to keep in mind:
- Services Vary from Bank to Bank: Personal banking services are exclusive to banks. While a certain bank might offer a service, another bank might not.
- Do not Share your Customer ID or Password: Never share your personal banking or netbanking customer ID or password with anyone.
- Be Careful with Credit/Debit Card Transactions: Credit and debit card scams are on the rise. Never share your credit or debit card PIN with anyone. No bank representative would ask you for your card PIN details, so keep that in mind.
- Log out from Your Netbanking Account: Once you’re done with your work, log out from your netbanking account. Take this as a precautionary practice/measure.
Final Word
The banking sector is witnessing a massive shift, in a positive way of course. Banks are rolling out new products and services to make the personal banking experience for customers all the more enjoyable.
FAQs
Ans: Retail banking, also known as personal banking or consumer banking, provides financial services to individuals rather than businesses. Individual consumers can use retail banking to manage their money, obtain credit, and deposit funds in a secured environment.
Ans: Netbanking makes personal banking experience all the more convenient. Earlier, to open an account, you had to pay a visit to the bank, fill out multiple forms and then wait for your turn to submit your application. With netbanking, all this and more can be done within a minute. Netbanking has made personal banking services and products accessible to customers.
Ans: The PPK Number is another name for the PrePrinted Kit Number. Banks provide a PPK number for New ATM Debit Card and Internet Banking Services. The PPK contains the default password, and the temporary User ID will be sent to the mobile phone number.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
