Before the discussion steers toward is wholesale banking is good or not, you need to understand what wholesale banking is in the first place. Wholesale banking is a type of banking service that is primarily given to large clients like financial institutions, large corporations, government agencies, estate developers and other banks. Hold banking is pretty much the opposite of the retail banking method. Retail banking normally focuses on small businesses and individual clients. While the whole banking focuses on large clients, capital financing, currency conversion, consultancy, etc.
Understanding wholesale bank loan
Nowadays, digital wholesale bank loan has become very common. And this the financial practice of borrowing and lending money between two large corporate bodies are conducted. These services are mainly provided by investment banks that are also involved in offering the services of retail banking. If you are looking to opt for hotel banking, you may not go to a specialized institution. There’s a chance that the bank that you are regularly visiting also has the option of corporate banking, which involves wholesale banking.
Wholesale services are usually only reserved for pension funds, government agencies and other large financial options. In many cases, wholesale banking also allows for lending and borrowing between 2 banks. This lending type mainly occurs in the interbank market and usually involves a ton of money.
When is wholesale banking a good option?
If you are looking to understand wholesale banking in deep, you can visualize it as a discount small. These discount malls usually deal in large quantity products. You cannot get a single item there. If you purchase a single item, you will have to purchase that item in bulk quantities. When you purchase large amounts of a certain material, you will get especially reduced prices or you may get the amount on a per-dollar basis. This is a huge advantage for organizations that have a ton of assets or conduct huge business transactions.
There may be multiple occasions when a business that has spread to multiple locations needs the solution of wholesale banking for proper cash management. If your company has a satellite office, you are a perfect candidate to opt for such services. Suppose the company that you work in has 10 different office locations. These office locations are supposedly distributed all over Singapore. Each of these office locations has a 50G member and a corporate credit card. Such company owners will require that each of these sales offices have at least 1,000,000 in cash reserves providing 10 million overall across the business. Such businesses will also have a large profit. These profit values are more than what regional banking can handle.
For this condition, owners can request the bank to engage in corporate banking. This corporate facility will keep all the financial accounts of the company. They can also opt for Singapore government grants at lower interest rates than what would be available for the retail banking option.