Retail banking has to be run efficiently as a cost-effective business. In addition to the high cost of branches and employees, operating costs can also be high. Maintaining IT systems, marketing products, running ATM networks, manning call centres, and investing in new technology all cost money. However, all of those are dwarfed by the cost of maintaining branches, which can be over 50% of a bank’s costs.
The bottom-line: With the recent banking crisis and frequent hits suffered by investment banking and corporate banking, retail banking is now accepted as the growth engine for all banking. At a large scale of operations, basic retail banking is immensely profitable.