The argument around the differences between general (generalist) banking and specialist banking can be analyzed from several viewpoints. A customer’s view of these terms would differ from that of an industrial analyst and so on.
However, HNWI and businesses are usually faced with deciding between a generalist banker (or general investment banks) and a specialist banker when choosing a banking service provider or partner.
The offerings of each banking model differ according to the time, conditions, and current operating parameters of the bank. It all comes down to organizational preferences, sector knowledge, relationships, and what model fits the needs of a bank at any point.
In this article, we try to spell out some of the differences between generalist banks and specialist banking services.
Definition and Scope
Generalist investment banks offer broader banking services to clients including loan grants, processing cheques and payments, maintaining balances, managing accounts, consultations and multiple investment instruments in multiple markets.
Usually, generalist banks serve wider markets due to their retail nature, wide knowledge scope across multiple industries, and openness to clients’ businesses. n nMost generalist banks are multifaceted, focusing on multiple industries at a time. Because generalist banks tend to have larger teams, they are better able to handle several larger and more complex financial transactions simultaneously — clearly a market advantage.
While they can absorb and execute multiple projects at a time irrespective of industry, generalist banks might be unable to offer in-depth services tailored to one industry. This is because they operate as a net and not a sword. They often lack the deep-level technical know-how required to offer clients niche-based banking services. Businesses such as these are often outsourced to specialist banks.
Experts have argued that general investment banks are not truly ‘general’ in the sense as they are composed of multiple teams of specialists in different fields, or limit their business to a number of sectors.