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7 Different Types of Banks to Consider When Starting Your Own

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When starting a business, one of the most important decisions you’ll make is which type of bank to work with. There are many different types of banks, each with its own features and benefits. Here are seven types of banks to consider when starting your own business.

 

Seven Types of Banks to Consider Opening

The most common bank type is the commercial bank. Commercial banks offer a wide range of services, including checking and savings accounts, loans, and lines of credit. They also offer foreign exchange services and can help you with international transactions. Commercial banks are a good choice for businesses with many customers and need a full range of banking services.

Let’s look at seven more bank types to consider opening

  1. Online banks are a good choice for businesses that do most of their business online. They offer all the same services as traditional banks, but they’re usually less expensive and more convenient. Online banks often have lower fees and higher interest rates on savings accounts.
    Features:

    • Lower fees
    • Higher interest rates on savings accounts 
  2. Community banks are locally owned and operated banks that focus on serving the needs of their community. They often have lower fees and better customer service than larger banks.
    Features:

    • Lower fees
    • Better customer service 
  3. Credit unions are cooperative financial institutions owned by their members. They offer all the same services as traditional banks, but they’re usually less expensive. Credit unions also tend to have better customer service.
    Features:

    • Lower fees
    • Better customer service 
  4. Investment banks: Investment banks focus on helping businesses raise capital. They can help you with Initial Public Offerings (IPOs), venture capital, and private equity. Investment banks are a good choice for businesses that are looking to grow quickly.
    Features:

    • Help with raising capital
    • Venture capital
    • Private equity 
  5. Merchant banks: Merchant banks specialize in providing financing for businesses that want to expand their operations or enter new markets. They can provide loans, lines of credit, and venture capital. Merchant banks are a good choice for businesses that are looking to grow quickly.
    Features:

    • Financing for expansion
    • Loans
    • Lines of credit
    • Venture capital 
  6. Private banks: Private banks are banks that cater to wealthy individuals and families. They offer a wide range of services, including investment management, estate planning, and trust services. Private banks often have higher fees than traditional ones but offer more personalized services.
    Features:

    • Investment management
    • Estate planning
    • Trust services
    • More personalized services 
  7. Savings and loans: Savings and loans are financial institutions that focus on savings accounts and home mortgages. They often have higher interest rates on savings accounts than traditional banks. Savings and loans are a good choice for businesses that want to offer their employees retirement benefits or help them save for a down payment on a home.
    Features:

    • Higher interest rates on savings accounts
    • Retirement benefits
    • Help with saving for a down payment on a home 

Select Your Bank Type

When considering what type of bank to open, it’s important to consider your business needs. There are many different types of banks, each with unique features and benefits. Consider the seven types of banks listed above to find the best fit for your business.