How Many Major categories Of Banks Are There

By: Nicole Carlos

There are several ways to categories banks, and the specific categories used can vary depending on the context. That being said, here are a few common ways that banks are categorized:

By: Nicole Carlos

1. By size: Banks can be classified as small, medium, or large based on various measures such as total assets, number of branches, and number of employees.
2. By type of financial services offered: Banks can be classified based on the types of financial services they offer, such as commercial banks, investment banks, and central banks.
3. By ownership structure: Banks can be owned by the government, by private shareholders, or by a combination of both.
4. By geographic location: Banks can be classified based on the countries or regions in which they operate.
5. By target market: Banks can be categorized based on the types of customers they serve, such as retail banks (which serve individual consumers) or wholesale banks (which serve other financial institutions and large businesses).
6. By type of deposits accepted: Banks can be classified based on the types of deposits they accept, such as savings banks, which primarily accept savings deposits, and checking banks, which primarily accept checking deposits.

By size

Sure, here are the three main categories of banks based on size:

1. Small banks: Small banks are generally defined as having assets of less than $1 billion. These banks may have a limited number of branches and offer a more personal level of service to their customers.
2. Medium-sized banks: Medium-sized banks are generally defined as having assets between $1 billion and $10 billion. These banks may have a larger number of branches and offer a wider range of financial services than small banks.
3. Large banks: Large banks are generally defined as having assets of more than $10 billion. These banks may have a very large number of branches, both nationally and internationally, and offer a wide range of financial services to their customers.

Note that these definitions are approximate and can vary depending on the context and the specific criteria used to define the size of a bank.

By type of financial services offered

Sure, here are a few common types of banks based on the financial services they offer:

1. Commercial banks: Commercial banks are financial institutions that provide a wide range of banking services to individuals and businesses, such as checking and savings accounts, loans, and credit cards. These banks make money by lending out the deposits that they receive from customers.
2. Investment banks: Investment banks specialize in providing financial services to corporations, governments, and other large organizations. These services may include underwriting and issuing securities, providing financial advice and guidance on mergers and acquisitions, and trading securities.
3. Central banks: Central banks are government-owned banks that act as a regulator for the banking system in their respective countries. They implement monetary policy, issue currency, and act as a lender of last resort to commercial banks.
4. Savings banks: Savings banks are financial institutions that primarily accept deposits from customers and use those deposits to make loans to borrowers. These banks may be organized as mutually owned cooperatives or as publicly traded corporations.
5. Credit unions: Credit unions are financial institutions that are owned and controlled by their members, who are also their customers. Credit unions offer a range of financial services, including checking and savings accounts, loans, and credit cards, to their members.

By ownership structure

Banks can be categorized based on their ownership structure as follows:

1. Government-owned banks: These banks are owned and operated by the government of a particular country. They may be established to serve a specific social or economic policy objective, such as providing financial services to underserved populations or supporting the development of a particular industry.
2. Private shareholder-owned banks: These banks are owned by private individuals or organizations and are operated for profit. The owners of these banks are entitled to receive a share of the profits generated by the bank.
3. Cooperative banks: Cooperative banks are owned and controlled by their members, who are also their customers. Cooperative banks may be organized as mutual societies, in which the members have equal ownership and voting rights, or as cooperatives with limited liability, in which the members have both ownership and voting rights based on their level of capital contribution.

By geographic location

Banks can be categorized based on the geographic location of their operations as follows:

1. Local banks: Local banks are banks that operate in a specific geographic region, such as a city, state, or country. These banks may have a limited number of branches and may focus on serving the banking needs of individuals and businesses within their local area.
2. Regional banks: Regional banks are banks that operate in a specific region of a country, such as the Midwest or the Southeast. These banks may have a larger number of branches and may offer a wider range of financial services than local banks.
3. National banks: National banks are banks that operate in multiple states within a country. These banks may have a very large number of branches and may offer a wide range of financial services to customers across the country.
4. International banks: International banks are banks that operate in multiple countries around the world. These banks may have a global presence and may offer a wide range of financial services to customers in different countries.

By target market

Banks can be categorized based on their target market as follows:

1. Retail banks: Retail banks are banks that serve individual consumers, offering a wide range of financial products and services such as checking and savings accounts, loans, and credit cards.
2. Wholesale banks: Wholesale banks are banks that serve other financial institutions and large businesses. These banks may offer specialized financial services such as underwriting and issuing securities, providing financial advice and guidance on mergers and acquisitions, and trading securities.
3. Private banks: Private banks are banks that serve high-net-worth individuals, offering a wide range of financial products and services such as wealth management, investment advice, and private banking services.
4. Investment banks: Investment banks serve corporations, governments, and other large organizations, offering financial services such as underwriting and issuing securities, providing financial advice and guidance on mergers and acquisitions, and trading securities.

By type of deposits accepted

Banks can be categorized based on the types of deposits they accept as follows:

1. Savings banks: Savings banks are banks that primarily accept savings deposits from customers. These deposits typically earn interest and may have certain restrictions on withdrawals. Savings banks may also make loans to borrowers using the deposits they have received.
2. Checking banks: Checking banks are banks that primarily accept checking deposits from customers. Checking deposits do not typically earn interest and may be withdrawn by the depositor at any time. Checking banks may also make loans to borrowers using the deposits they have received.
3. Money market banks: Money market banks are banks that offer high-yield, short-term investments such as money market mutual funds. These investments are typically considered to be very low risk and may be used by investors as a place to park their money temporarily.