The 10 Types of Bank: A Complete Guide for 2025

When you think of banks, you might picture the place down the street where clients keep a checking account or maybe get a loan. But the banking world is much broader than that. From digital-first platforms to global institutions handling complex financial deals, there’s a wide range of banking options out there, each serving a different purpose. Whether you’re managing personal finances, running a company, or investing across borders, it’s helpful to understand which type of bank is best suited for your needs. At Offshore Pro Group, we’ve helped clients navigate global financial institutions for years, and this guide explores the ten main categories of banks in 2025.

What Is a Bank? A Simple Definition

At the simplest level, a bank is just a place you put your money so it’s safe. But of course, it’s more than that — banks lend money out, give credit, and keep the whole financial system running. They’re kind of like the middlemen who make sure money doesn’t just sit there but actually moves around, helping businesses grow and letting people buy things they couldn’t pay for up front. Banks can help you send money abroad, suggest places to invest, or even manage your finances if you’ve got serious savings. But not all banks are built for the same thing; some are geared toward everyday banking, others cater to businesses or high-net-worth individuals. Knowing which kind does what can help you determine where your money fits best.

Remember, you have not only a choice about what type of bank you want, but also regarding jurisdictions, each with its own benefits. You can read more about offshore banking countries and contact us to find a jurisdiction and financial institution that suits your specific needs.

The Main Different Types of Banks Explained

Not all banks are the same; in fact, they serve very different purposes. Some, such as central banks, sit at the heart of an economy and influence how money flows on a national level. Others, like retail banks, are the ones most of us deal with day to day, helping us open accounts, save, or take out loans. Each type has its own role to play in keeping the financial system running smoothly. You can see these differences in the table below. 

Bank Type	Primary Customer	Core Function
Central Bank	Government & Banks	Manages currency & monetary policy
Retail Banks	Individuals	Everyday banking (checking, savings)
Commercial Banks	Businesses	Business loans, credit, & treasury management
Investment Banks	Corporations & Governments	Capital raising, M&A, & underwriting
Credit Unions	Members/Community	Consumer-friendly services with lower fees
Private Banks	High-Net-Worth Individuals	Wealth management & personalized service
Online Banks	Digital-first Consumers	Low-cost, tech-based banking
Neobanks	App-based Users	Mobile-first, innovative financial tools
Savings and Loan Associations	Households	Mortgages, savings accounts, & home financing
Islamic Banks	Customers seeking Sharia compliance	Interest-free banking, & investing in accordance with Muslim ethics

1. Central Banks

The central bank is the ultimate financial institution in a country. It controls the supply of money, regulates commercial banks, and ensures economic stability.

Bank Key Services

Central banks oversee monetary policy, set interest rates, and act as lenders of last resort. They also regulate financial institutions, keeping the banking system safe.

Examples of Central Banks

The U.S. Federal Reserve, the European Central Bank (ECB), and the Bank of England.

Who they serve

Governments and entire national economies — not individuals.

2. Retail Banks (Commercial Banks for Consumers)

Retail banks are the most familiar type of bank, serving the general public. They provide everyday banking services, including checking and savings accounts.

Bank Key Services

Retail banks generally offer personal loans, mortgages, savings deposit accounts, and credit cards. They remain the most common type of bank globally.

Examples of Retail Banks

Bank of America, Wells Fargo, HSBC, Santander, and BNP Paribas.

Best for

Individuals who want accessible, everyday financial services.

3. Commercial Banks (Business Banks)

These are mainly aimed at businesses, rather than individual customers. Whether it’s a small local shop or an international giant seeking corporate banking services, commercial banks are there to help with the financial tools businesses need to operate and grow.

Bank Key Services

They handle tasks such as business loans, setting up lines of credit, managing company cash flow, and assisting with payments to international suppliers. If a business needs to move money around or requires funding for expansion, this is usually where they turn.

Examples of Commercial Banks

Citi, HSBC, JP Morgan, and Barclays.

Best for

Small businesses, large corporations, and enterprises requiring structured financing solutions.

4. Investment Banks

An investment bank is not about everyday accounts but about helping companies and governments raise capital.

Bank Key Services

Investment banking services include mergers & acquisitions (M&A), underwriting IPOs, and managing investment portfolios.

Examples of Investment Banks

Goldman Sachs, Morgan Stanley, BNP Paribas, and Deutsche Bank

Best for

Corporations, institutional investors, and governments needing capital-raising or advisory services.

5. Credit Unions

Credit unions are member-owned cooperatives offering many of the same services as retail banks but usually with lower fees and better interest rates.

Bank Key Services

They provide savings accounts, checking accounts, credit cards, and loans to their members.

Examples of Credit Unions

Examples include Navy Federal Credit Union and Alliant Credit Union.

Best for

People living in a community who want lower fees, better loan rates, and a more personal banking relationship.

6. Private Banks

Private banks specialize in serving high-net-worth individuals with customized strategies.

Bank Key Services

Services include wealth management, investment advice, tax optimization, and estate planning.

Examples of Private Banks

UBS, Credit Suisse, and J.P. Morgan Private Bank.

Best for

Individuals with significant wealth who need tailored financial solutions. 

7. Online Banks (Direct Banks)

An online-only bank operates entirely digitally, without physical branches. Sometimes, they are owned by a larger banking family.

Bank Key Services

Banks generally offer high-yield savings accounts, checking accounts, and lower fees thanks to reduced overhead.

Examples of Online Banks

Ally Bank, Hello Bank (under BNP Paribas),

Best for

Tech-savvy individuals who want convenience and better interest rates.

8. Neobanks

Neobanks are fintech firms that deliver modern banking services through apps, not tied to traditional banks (although they may acquire licensing through other banks). 

Bank Key Services

They provide tools like budgeting apps, currency exchange, and international transfers.

Examples of Neobanks

Revolut, Airwallex, Wise, Varo, and Monzo.

Best for

Digital nomads, international entrepreneurs, and younger generations seeking innovation and flexibility.

9. Savings and Loan Associations (S&Ls)

Savings and loan associations, sometimes called “thrift institutions,” focus on helping households save money and finance homes. S&L is the term used in the United States; elsewhere, such as the UK, Ireland, and in some of the British Commonwealth, the term for a similar concept is “building society” or “trustee savings banks”. 

Bank Key Services

They offer savings accounts, home loans, refinancing, and mortgages.

Examples of S&Ls

Local savings and loan associations, Capital One 360, and Nationwide Building Society.

Best for

People who want to save for housing or secure affordable home loans.

10. Islamic Banks

Islamic banks follow Sharia law, avoiding traditional interest and focusing on investments in accordance with the principles of faith (i.e., no gambling, alcohol, etc.).

Bank Key Services

Profit-sharing agreements, asset leasing, and socially responsible banking services.

Examples of Banks

Dubai Islamic Bank and Al Rajhi Bank.

Best for

Clients who want financial services aligned with Islamic principles.

How to Choose the Right Type of Bank for You

It all depends on what you’re looking for. You should weigh up some of these: 

• Would you prefer the option of going in-branch or only online?
• Are you focusing on day-to-day activities, investments, or savings?
• Is this for you or your company? How big is your company?

If all you need is a basic place to keep your money, pay bills, or occasionally take out a loan, a retail bank or credit union should suffice. But if you prefer managing everything from your phone and don’t care about walking into a branch, a digital bank or neobank might be a better fit for your style. Businesses typically turn to commercial banks for lines of credit and cash flow options, while those with larger balances may opt for private banking to receive a more personalized service. Offshore Pro often helps clients find the right private bank that matches their goals in a range of different jurisdictions.

When weighing your options, it’s worth thinking about both stability and scale. If safety is your top concern, check out our detailed list of the world’s safest banks, which breaks down institutions with the strongest financial footing. On the other hand, reputation often goes hand in hand with size. While size isn’t everything, it’s useful to know who the heavyweights are, and you can find them in our ranking of the top 10 largest banks in the world.

Conclusion

Understanding the different types of banks is crucial when it comes to your financial strategy, as is choosing the right bank and country to conduct your banking in. You may consider setting up banks in a foreign country from your own, for privacy, wealth protection, international transfers, and asset diversification, whether you’re a budding entrepreneur, digital nomad, or high-net-worth individual.

You can contact us to learn more about banking options available to you. At Offshore Pro Group, we help clients match their financial goals with the most suitable bank in the best jurisdiction and help them remain compliant. Remember, you can book a complimentary 15-minute consultation to discuss your options or schedule a one-hour deep dive (€300, discounted from €500) for tailored expert advice.

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