What is Group Banking?
Group banking is a term that refers to a type of banking plan offered to groups such as employees in a corporation of people instead of individuals. These plans provide incentives and other benefits for those who participate, which are not readily available to the bank's other customers. Group banking can also refer to the control that a company has over two or more financial institutions.
Key Takeaways
- Group banking is a plan offered by banks to large groups of people such as employees at a company.
- Potential incentives for group banking can include low- or no-fee checking accounts, lower interest rates, special perks, and discounts.
- Plan participants generally have better perks than they would otherwise be able to get on their own.
How Group Banking Works
Group banking works a lot like a group health insurance policy that is offered by insurance companies to employees. A bank will team up with a corporation and offer its employees a group banking plan. Employees are usually not required to sign up for group banking benefits offered by an employer.
The perks of signing up for group banking are usually attractive enough to compel many employees to take advantage of the plan. Group banking provides banks with a pool of customers they do not have to actively recruit. It also reduces the costs associated with transactions like direct deposit. Group banking also gives banks access to more capital via the money deposited by group members.
Along with those who participate, group banking also benefits banks because it brings in new clients and more capital.
Banks offer those who sign up special benefits that they don't make available to the general public. Potential incentives for group banking include lower interest rates, lower fees, and other discounts. Group banking plan members usually have access to better perks than they would otherwise be able to obtain on their own. Employees are usually able to choose the account types and financial products that meet their individual needs. Some banks may offer group banking members reward points that can be redeemed for travel, gift cards, cash, or merchandise.
Other benefits of group banking plans include a bank representative who is generally more knowledgeable of the group's plan and needs. This person serves as the regular point of contact between the bank and plan participants. This leads to a more personalized banking experience for all members of the group. Banks may also offer group members seminars on personal finance topics or one-on-one financial advice to help them reach their financial goals.
Special Considerations
Employers benefit from offering group banking plans because many employees consider it to be an employment benefit on a par with paid time off, sick leave, health insurance, and retirement savings plans. This means partnering with a bank to offer group banking can help businesses attract and retain high-quality talent. Group banking plans can allow employers to expand their employee benefits packages for a minimal additional cost. As companies try and become more competitive with hiring, every benefit counts—at least from a potential employee's perspective.
Members of a group banking plan do not have to be employees of the same company. In fact, members of any organization or cooperative may be able to take advantage of a group banking plan. Group banking plan members may be members of the same church, homeowners association (HOA), or other group. Even family members can sometimes be granted access.
Example of Group Banking
The Big Bank may offer banking services to employees of Company A. While employees are not required to take part in the group plan, The Big Bank offers a special checking account with low or, in some cases, no fees to each and everyone who signs up into which employees can have their paycheck deposited directly. In exchange for their business, The Big Bank may also offer preferred interest rates to Company A employees with the checking account. Employees who don't have a checking account may also qualify for other, competitive rates as well. The Big Bank may also provide other promotions and special perks such as higher interest rates on savings accounts and certificates of deposit (CDs).
FAQs
Group banking works a lot like a group health insurance policy that is offered by insurance companies to employees. A bank will team up with a corporation and offer its employees a group banking plan. Employees are usually not required to sign up for group banking benefits offered by an employer.
What is group banking with example? ›
Group banking is a type of financial service in which a bank offers special perks to a group of people, such as employees of a certain company or members of an organization. Group banking features vary by institution but may include access to free bank accounts, better interest rates, waived fees, and special services.
What are the group functions in banking? ›
Group Functions
Services includes the Group's control functions such as Finance, Risk Control (including Compliance) and Group Legal, and, within these, certain corporate and stewardship services and the costs associated therewith.
What is banking and its examples? ›
People deposit their money in banks; the bank lends the money out in car loans, credit cards, mortgages, and business loans. The loan recipients spend the money they borrow, the bank earns interest on the loans, and the process keeps money moving through the system.
What are the advantages of group banking system? ›
Group banking offers a range of benefits for community development, including increased access to financial services, enhanced financial literacy, collective bargaining power, local economic development, and social cohesion.
What is the difference between branch banking and group banking? ›
In a branch system there is but one legal entity of which the several offices are a part. A group system comprises separately incorporated banks ,-^with or without branches?
How do banks group money? ›
All Notes. A bundle consists of 1,000 notes of the same denomination in ten equal straps of 100 notes each. All strap edges must be vertically aligned into a single organized stack and oriented in the same direction. Straps must be bound together.
What are the three main functions of a group? ›
Group Functions
Three functions that influence the effectiveness and productivity of groups are task functions, maintenance functions, and self-interest functions.
What is account group in banking? ›
Account Groups are the collection of Ledgers with the same characteristics. They are used to establish the hierarchy of Ledger Accounts, which aids in the creation of relevant and compliance reporting.
What are 3 key functions of the banking system? ›
Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds.
Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).
What are 4 types of banking? ›
The 4 different types of banks are Central Bank, Commercial Bank, Cooperative Banks, Regional Rural Banks. You can read about the Types of Banks in India – Category and Functions of Banks in India in the given link.
What is an example sentence for banking? ›
Examples of banking in a Sentence
They are both in banking. He chose banking as a career. These examples are programmatically compiled from various online sources to illustrate current usage of the word 'banking.
Which group is best for banking? ›
Through the Bachelor of Finance and Accounting, students gain the knowledge of skills that they need in their banking career. Therefore, it is the best banking course after 12th class. Eligibility: Students must have passed their 12th. They should also have studied subjects like mathematics, economics, and accounting.
Why is teamwork important in banking? ›
Collaboration and teamwork are essential skills for bank staff, especially for tellers who interact with customers and colleagues on a daily basis. Working together can improve customer service, efficiency, problem-solving, and innovation.
What is a group account in a bank? ›
Group account is a book account whose assets consist of the balances and reservations on the current account of group members and the overdraft of the group.
What are the three types of banking? ›
Banks, Thrifts, and Credit Unions - What's the Difference? There are three major types of depository institutions in the United States. They are commercial banks, thrifts (which include savings and loan associations and savings banks) and credit unions.
