# What Is Wholesale Banking? Types of Services and Example

> **Definition**
>
> Wholesale banking is provided to large clients such as corporations and government agencies and focuses on complex financial transactions and tailored solutions.

## Wholesale Banking Definition

Wholesale banking is banking services sold to large clients. Such services include currency conversion, large trade transactions, [mergers and acquisitions](https://www.investopedia.com/terms/m/mergersandacquisitions.asp), and [underwriting](https://www.investopedia.com/terms/u/underwriting.asp).

Wholesale banking differs from retail banking in its aforementioned services and its clients, which include other banks and financial institutions, government agencies, large corporations, and real estate developers. [Retail banking](https://www.investopedia.com/terms/r/retailbanking.asp) handles small- to medium-sized transactions, like those in everyday banking, and focuses on individual customers and small businesses.

Institutions opt for wholesale banking over retail banking because the former aims to build long-term relationships with them and offers significant capital for large-scale projects and international expansion.

Because wholesale banking is closely tied to market conditions and economic cycles, its profitability and stability can be negatively affected by market volatility, interest rate changes, and currency rate fluctuations, among other factors.

### Key Takeaways

*   Wholesale banking provides financial services to large clients like corporations, banks, and government agencies, offering benefits like currency conversion and mergers and acquisitions.
*   This sector focuses on long-term relationships with institutional clients, while retail banking caters to individual customers and small businesses with standardized services.
*   Wholesale banks provide access to substantial capital for large-scale projects and international expansion, benefiting from their global reach and presence.
*   While wholesale banking offers customized services, it also faces complex regulatory environments and higher risks due to large-scale transactions.
*   Despite differences, many banks, like Wells Fargo and Bank of America, serve both retail and wholesale markets, providing diverse financial services.

![Wholesale Banking](https://www.investopedia.com/thmb/QWBvkBeNW84yrQnui3xXOICCc14=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/wholesalebanking.asp-final-a66a3364a600475f9d3678015041ef52.png)

*Because of the large scale, prices offered for wholesale banking services are typically lower than what is offered to an individual. — Laura Porter / Investopedia*

## How Wholesale Banking Works

In its essence, wholesale banking is the financial practice of lending and borrowing between two large institutions. The types of services are provided by investment banks that often also offer retail banking. This means that an individual looking for wholesale banking wouldn't have to go to a special institution and could instead engage the same bank in which they conduct their personal retail banking.

The services that are considered "wholesale" are reserved only for government agencies, pension funds, corporations with strong financials, and other institutional customers of a similar nature. It is for entities that require more service than an individual or a small business, and one that needs it on a large scale. Because of the large scale, the prices offered for these services are typically lower than what is offered to an individual.

Wholesale banking also refers to the borrowing and lending between institutional banks. This type of lending occurs on the [interbank market](https://www.investopedia.com/terms/i/interbankmarket.asp) and often involves extremely large sums of money.

## Comparing Wholesale and Retail Banking

Wholesale and retail banking are distinct sectors within the banking industry, catering to different customer segments and needs. Wholesale banking focuses on institutional clients, such as corporations, governments, large businesses, financial institutions, and high-net-worth individuals. Retail banking focuses on individual customers and small businesses.

Wholesale banking handles large-scale financial transactions, while retail banking handles small- to medium-sized transactions, including everyday banking activities. Wholesale banks tend to offer a range of sophisticated financial products and services, while retail banks provide standardized banking products and services to individual customers.

In general, wholesale banking aims to build long-term relationships with corporate clients. Retail banking, on the other hand, focuses on customer service and relationships with individual clients. Retail banking focuses on smaller, more standardized transactions with lower risk profiles; as such, retail banking may be seen as having lower risk, as the client base often has fewer assets or resources. Despite their differences, many banks operate in both sectors, providing a diverse range of financial services to cater to a wide range of clients' needs.

> **Important**
>
> Many banks provide both retail and wholesale banking services. Large banks like Wells Fargo, U.S. Bank, and Bank of America offer both types of banking.

## Pros and Cons of Wholesale Banking

### Pros

Wholesale banking provides a number of benefits, not only to financial institutions but also to the customers they serve at the institutional level.

*   Wholesale banking offers **individualized financial services** to cater to the intricate and particular requirements of its institutional customers. These banks are able to offer customized products and services to cater to the specific needs of their customers.
*   Wholesale banking provides **access to substantial capital**, making it suitable for large-scale projects, corporate expansions, mergers and acquisitions, and other types of business endeavors.
*   Wholesale banks deploy complex [risk models](https://www.investopedia.com/terms/r/risk-analysis.asp), carry out exhaustive due diligence, and put risk mitigation plans into action to **have higher safeguards** not only in the interests of the bank but also those of its customers.
*   Because wholesale banking is conducted on a worldwide scale, it enables customers to gain access to a diverse set of financial services and to participate in markets **all over the world**. Clients are able to exploit the global reach of wholesale banks for cross-border transactions, trade finance, [foreign currency](https://www.investopedia.com/terms/f/foreign-exchange.asp) services, and international business expansion because wholesale banks frequently have large networks and a presence in numerous countries.
*   Wholesale banking is characterized by its primary focus on the **effective processing of large-scale transactions**. Banks operating in this sector are equipped with sturdy infrastructure, advanced technological platforms, and streamlined processes to manage complicated financial activities.
*   Wholesale banks have **extensive market knowledge** and different perspectives on the market, both of which they share with their customers. They offer research reports, economic analyses, and updates on market trends, which enable clients to make well-informed decisions and maintain a competitive advantage in a corporate climate that is constantly shifting and evolving.

### Cons

Wholesale banking may also come with a few possible drawbacks; the following is a list of some of them.

*   Because wholesale banking deals with financial transactions that are larger and more complicated, it is intrinsically subject to a **greater range of hazards** than retail banking is. It is possible for wholesale banks to be exposed to credit risks, market risks, and operational risks as a result of the operations of their institutional clients.
*   Wholesale banking is closely tied to market conditions and economic cycles. Changes in market volatility, interest rates, and currency rates are all factors that have the **potential to have negative economic effects** on the profitability and stability of wholesale banks.
*   The wholesale banking industry is extensively regulated because of the nature of the activities it engages in and the potential impact they have on the stability of the financial system. This creates a **complex regulatory** environment.
*   The **risk of concentration** is present in wholesale banking since the business frequently interacts with a small number of very big institutional customers. This high level of concentration of risk might elevate the stakes if a significant customer runs into financial difficulties or fails to fulfill their commitments. Losing a major customer can significantly harm a bank's financial health and profitability.
*   To keep their business running well, wholesale banks need to make significant investments in capital. The **need for a large amount of [capital](https://www.investopedia.com/terms/c/capital.asp)** can negatively affect a bank's profitability and restrict its flexibility in allocating resources to other uses.

> **Fast Fact**
>
> A 2023 evaluation of the wholesale banking sector by PwC led to the consulting firm stating the upcoming challenge of the industry is "balancing the growing complexities of daily operations within the wholesale banking industry with a focus on the extended time horizons of an enterprise-wide transformation."

## Real-Life Example of Wholesale Banking

The easiest way to conceptualize wholesale banking is to think of it as a discount superstore, like Costco, that deals in such large amounts that it can offer special prices or reduced fees, on a per-dollar basis. It becomes advantageous for large organizations or institutions with a high amount of assets or business transactions to engage in wholesale banking services rather than retail banking services.

For example, there are many occasions when a business with multiple locations needs a wholesale banking solution for cash management. Technology companies with [satellite offices](https://www.investopedia.com/terms/s/satellite-operation.asp) are a prime candidate for these services. Let's say that a SaaS (software-as-a-service) company has 10 sales offices distributed around the United States, and each of its 50 sales team members has access to a corporate credit card. The owners of the SaaS company also require that each sales office keeps $1 million in cash reserves, totaling $10 million across the business. It's easy to see that a company with this profile is too large for standard retail banking.

Instead, the business owners can engage a bank and request a corporate facility that keeps all the company's [financial accounts](https://www.investopedia.com/terms/f/financial-account.asp). Wholesale banking services act like a facility that offers discounts if a business meets minimum cash reserve requirements and minimum monthly transaction requirements, both of which the SaaS company will hit.

It is thus beneficial for the business to engage in a corporate facility that consolidates all its financial accounts and reduces its fees, rather than keeping 10 retail checking accounts and 50 retail credit cards open.

## What Services Does Wholesale Banking Offer?

Wholesale banking provides services like corporate banking, investment banking, and trade finance.

## How Can Companies Choose the Right Wholesale Bank?

Companies should consider factors such as the bank's expertise, reputation, global reach, services offered, industry knowledge, and relationship-building capabilities when choosing a wholesale bank.

## How Does Wholesale Banking Contribute to Economic Growth?

Wholesale banking supports economic growth by providing capital for large-scale projects, facilitating mergers and acquisitions, enabling trade finance, and offering financial expertise and advisory services to businesses and institutions.

## What Are the Career Opportunities in Wholesale Banking?

Wholesale banking offers diverse career opportunities, including roles in corporate banking, investment banking, risk management, treasury services, capital markets, relationship management, and financial advisory.

## The Bottom Line

Wholesale banking serves large clients like corporations, government agencies, and financial institutions with services such as mergers and acquisitions, currency conversion, working capital financing, and underwriting.

Wholesale banking involves large-scale financial transactions, providing tailored services to meet the complex needs of institutional clients, often at lower costs due to the scale of the transactions. That separates it from retail banking, which targets individual clients and small businesses, mainly focusing on smaller, more standardized transactions.  
  
Wholesale banking helps drive economic growth by facilitating capital access for large-scale projects, supporting global trade, and providing extensive market insights.

The pros (such as access to substantial capital and global reach) and cons (such as higher risk exposure and a complex regulatory environment) of wholesale banking can guide stakeholders in making informed decisions.

Many major banks, like Wells Fargo and Bank of America, offer both retail and wholesale banking services, enabling them to provide a wide range of financial solutions to various client needs.

> **Article Sources**
>
> 1.  PwC. "[Wholesale Banking 2025 and Beyond.](https://www.pwc.com/gx/en/industries/financial-services/publications/financial-services-in-2025/wholesale-banking-2025.html)"