11 Types of Banks (Retail, Digital, Private, Investment…)

types of banks

Banking is an incredibly complex industry that is thousands of years old. It’s no wonder, then that modern banks have evolved to include all sorts of services. For that reason, there are many different types of banks.

  1. Retail Banks
  2. Digital Banks
  3. Commercial Banks
  4. Investment Banks
  5. Cooperative Banks
  6. Credit Unions
  7. Community Development Banks
  8. Savings And Loan Banks
  9. Private Banks
  10. Central Banks
  11. Shadow Banks

1. Retail Banks

The first type of bank we’re covering is the retail bank. It’s a type of bank you probably have in your mind when you imagine a typical bank. 

In a retail bank, you can open a personal or business account coupled with debit and credit cards, get a loan, or mortgage, invest your money or save it, and many other things

The most traditional type of retail bank is the brick-and-mortar bank. They’re usually positioned in the most frequented parts of town and are usually the staple of the community, especially in small towns.

Most brick-and-mortar banks now offer internet or online banking, as well as mobile banking apps, meaning you don’t have to visit your bank branch as often, or ever, in fact. 

bank of america

An example of a retail bank would be Bank of America in the US. It serves almost 70 million personal and business customers and has around 4,000 retail centers, as well as 16,000 ATMs. 

It’s a modern bank that can fulfill most, if not all, of your banking and financial needs. Its award-winning mobile app has around 55 million verified users. 

RELATED: 18 Types of Bank Products (Financial Products and Services)

2. Digital Banks

Digital banks, challenger banks, or neobanks are relatively new types of banks. However, they have exploded in popularity in the last five years and now have, combined, hundreds of millions of users worldwide.

What characterizes digital banks is how easy it is to open an account. The whole process can be done online and includes minimal documentation. Most often, you’ll only need your ID and your social security number. 

Digital banks don’t have physical bank branches, so all the banking is done on your smartphone in a mobile app. This makes it extremely easy to open a digital bank as there are way fewer overhead costs associated with branches and thousands of employees. 

There are now numerous digital banks on the market in every country. In the US, the most popular digital banks are Chime, Current, Varo, and Ally, as well as mobile payment apps such as Cash App and Venmo.

However, there’s one digital bank that is spreading around the world and gaining a lot of traction. It comes from the UK and has more than 20 million personal users, as well as a million business customers already. Of course, I’m talking about Revolut


Revolut makes it easy to open an account in many countries and supports more than 30 currencies. You can also add all your other bank accounts to their app to have them all in one place.

Apart from that, its paid accounts offer cashback, interest rates on savings, travel insurance, and an exclusive metal debit card. No matter what Revolut account you have, you can invest in crypto, stocks, and even commodities. 

For more information, read our full Revolut review.

3. Commercial Banks

citigroup commercial banking

Commercial or corporate banks focus on businesses and organizations of all sizes, as well as huge corporate entities. Every major bank has a commercial aspect to it as well as these are the most lucrative accounts they can have. 

It’s no surprise that the biggest commercial banks come from the ranks of the biggest banks overall. The big four banks are leaders in the commercial side of things as well. 

JP Morgan Chase is the biggest bank in the US, with $3.38 trillion in assets under management. Bank of America is second with $2.44 trillion, and Citigroup and Wells Fargo are third and fourth with $1.72 and $1.71 trillion, respectively. 

4. Investment Banks

Investment banks wear many hats. They not only advise individuals, pension funds, and companies of all sizes on how to best invest and manage their funds but also deal with mergers and acquisitions, manage investment portfolios, and even raise money for the government and businesses.

These types of banks also deal with complex financial transactions such as underwriting and serve as intermediaries. 

The ten largest full-service investment banks are:

  1. JPMorgan Chase (US)
  2. Goldman Sachs (US)
  3. BofA Securities (US)
  4. Morgan Stanley (US)
  5. Citigroup (US)
  6. UBS (CH)
  7. Credit Suisse (CH)
  8. Deutsche Bank
  9. HSBC (UK)
  10. Barclays (UK)

All of these investment banks are so-called “bulge bracket banks” and underwrite the majority of financial transactions in the world. 

Bulge bracket banks are the world’s most considerable multi-national investment banks that serve mostly institutional investors, large corporations, and governments.

READ ALSO: 5 Types of Credit Unions (Federal, State, College…)

5. Cooperative Banks

Cooperative banks, or simply cooperatives, are typically local or community-based institutions and associations. Its members are the ones who own, operate, and fund the organization and its operations. 

They can be retail banks or commercial banks and are popular throughout the world. Cooperative banks usually come in the form of:

  • Credit union
  • Building society
  • Land development bank
  • Mutual savings banks
  • Mutual savings and loans associations
  • International associations of cooperative banks
bank australia

A great example of a cooperative would be Bank Australia which is based in Collingwood, Victoria, and goes back to 1957.

Bank Australia is a blend of 72 credit unions and co-operatives. In 2020, it had total assets under management of A$7.2 billion. It is notable for having never invested money in fossil fuels, military weaponry, tobacco, live animal exports, or gambling. 

6. Credit Unions

Credit unions offer limited banking services and are owned, created, funded, and operated by their members and clients. 

They are a type of cooperative banking. When a member buys shares in a credit union, the funds are pooled together with others to fund the credit union and its operations, such as loans. 

Credit unions are on the opposite specter of banks as they are not-for-profit institutions, unlike banks that are exclusively for profit. 

These types of banks are usually tax-exempt and serve people in the same area, army veterans, low-income members of the community, and so on.

The Navy Federal Credit Union, or simply Navy Federal, is a perfect example of a credit union. In fact, this global credit union from Virginia is the biggest retail credit union in the US, excelling in both members and assets. 

Navy Federal goes back to 1933 and now has more than 12 million members and more than $160 billion in assets. 

7. Community Development Banks

carver bank

Just like cooperative banks and credit unions, community development banks serve their members and their community. They have a mission to generate economic development in low- to moderate-income (LMI) areas.

New York’s Carver Federal Savings Bank is an example of a popular CDB. The bank was founded in 1948 under the leadership of M. Moran Weston and is the largest black-owned financial institution in the US. 

The bank offers all sorts of personal and business accounts, consumer, business, and other types of loans, as well as personal and business credit cards. 

READ NEXT: 15 Bank Account Scams (How to Easily Avoid Them)

8. Savings And Loan Associations

Savings and loans associations, or thrifts, are focused on getting savings deposits and giving out mortgages and other loans.

Outside of the United States, these types of financial institutions include trustee savings banks and building societies. 

They are generally cooperatives called mutual savings banks, and therefore, their members (depositors and borrowers) have voting rights. 

9. Private Banks

brown brothers harriman

Private banks have a long tradition and have been popular in the UK and Switzerland since the 1600s. As was the case in the past, private banks are reserved for wealthy people with millions in assets (at least). 

In the US, only those with at least a $1 million net worth can be clients of private banks. 

They are designed to manage clients’ wealth, set up trusts to avoid taxes during inheritance, and offer similar services. 

An example of this type of bank would be Brown Brothers Harriman & Co. (BBH) – the oldest and one of the biggest private investment banks in the US. 

The bank does what a private bank is supposed to do, it provides wealth management, investor services, commercial banking, and other services to high-net-worth individuals as well as corporate institutions. 

RELATED: 7 Types of Money (Fiat, Representative, Commodity…)

10. Central Banks

A central bank manages the currency and monetary policy of a state or country and oversees its commercial banking system. They are also called reserve banks.

In the US, the central banking system is called The Federal Reserve System (FED), and it was created in 1913 after a series of financial crises.  

The FED is incredibly complex and has twelve regional Federal Reserve Banks that are located throughout the nation to regulate and oversee privately-owned banks.

Although central banks are instruments of governments, they usually aren’t funded by them and act independently. 

11. Shadow Banks

Shadow banks are non-bank financial intermediaries (NBFIs) that provide some banking services outside of the banking regulations. It’s also called market-based lending.

Examples of shadow banks or NBFIs would be:

  • Microloan organizations
  • Insurance firms 
  • Payday lenders 
  • Pawn shops 
  • Cashier’s check issuers 
  • Check cashing locations 
  • Currency exchanges 

Shadow banking is a form of unregulated credit intermediation as these types of institutions aren’t obliged by the same regulations banks are and aren’t held by the same scrutiny. 

The shadow banking market is very lucrative and has tens of trillions dollars in assets.


Have you known all of these bank types? There are many more types than your run-of-the-mill bank on the corner, as you can see. 

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The Future of Banking

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The Future of Banking

As a Current mobile banking app affiliate, I get a commission at no cost to you if you decide to sign up through my links.