Guide to wholesale banking in the US

Business owners in the United States have a variety of financial institutions to choose from. One category worth understanding is wholesale banking, which plays a significant role in serving large enterprises, institutions, and government entities. However, in the US, the term wholesale bank can refer to either:

• A regulatory designation under the Community Reinvestment Act (CRA), referring to banks that don’t offer traditional consumer loans, and

• An industry term for banking services geared toward large-scale corporate and institutional clients.

Keep reading to learn more about wholesale banking in the US, how these institutions are defined, what services they offer, and how the Airwallex Business Account can help SMEs and growing businesses manage their global financial operations.

What is wholesale banking?

Regulatory definition

In the US, the Office of the Comptroller of the Currency (OCC) designates certain banks as wholesale banks under the CRA.¹ These banks primarily serve corporate or institutional clients and do not offer retail banking products like mortgages or consumer loans. Instead, they’re evaluated on their community development lending and investments.

Examples of OCC-designated wholesale banks include:

• Morgan Stanley Bank, N.A.

• Modern Bank, N.A.

• Safra National Bank of New York

• Metropolitan Bank and Trust Co.

Industry definition

Beyond regulation, wholesale banking also encompasses a range of banking services that support large-scale financial operations, including capital raising, risk management, and global treasury solutions, for multinational corporations, governments, pension funds, and financial institutions.

These services are typically offered by large banks like:

• J.P. Morgan (Wholesale Payments)

• Citi (Treasury and Trade Solutions)

• Bank of America (Global Banking)

Wholesale bank vs. full bank

While wholesale banks play an important role in supporting large-scale institutions, they aren’t structured like the full-service banks most consumers and small businesses are familiar with. To understand where wholesale banks fit into the broader financial ecosystem, let’s look at how they compare to full-service banks in terms of their customers, services, and structure.

A full-service bank in the US provides a wide range of services for individuals and businesses, from personal checking accounts to corporate lending. Federal or state authorities often regulate these and serve a broad customer base.

In contrast, a wholesale bank – whether CRA-designated or operating as a division within a larger bank – serves institutional clients with tailored, high-volume financial products. These services are often delivered by specialized teams within the most prominent US financial institutions.

The main difference lies in who they serve and the type of services provided.

What's the difference between wholesale, retail, and commercial banking?

Wholesale banking, retail banking, and commercial banking cater to distinct clients and financial needs. Here’s a quick breakdown of how they differ:

• Wholesale banking: serves large corporations, financial institutions, and government entities with complex services, including structured financing, syndicated loans, M&A advisory, and global treasury management.

• Retail banking: offers personal financial services to individuals, including checking and savings accounts, personal loans, mortgages, and credit cards.

• Commercial banking: serves businesses, typically ranging from small to mid-sized enterprises, with services such as business accounts, working capital loans, payroll solutions, and merchant services.

While wholesale banking services are designed for large institutions with complex needs, fintech platforms like Airwallex offer financial tools that help SMEs manage global operations more efficiently.

Wholesale banking services

Wholesale banks excel at these specialized services:

• Trade financing: facilitates import/export deals, provides letters of credit, and manages payment risk.

• Structured financing: delivers large-scale loans via syndicated lending structures for infrastructure, energy, or corporate expansion projects.

• Treasury and cash management: provides liquidity management, FX hedging, and centralized visibility for global cash flows.

• Capital raising: assists clients in securing funds through bond issuances, private placements, or IPOs.

• Risk management: uses derivatives and other financial tools to hedge currency, interest rate, and commodity exposure.

Advantages and disadvantages of wholesale banking

Like any financial service, wholesale banking comes with advantages and challenges. Understanding its advantages and disadvantages can help businesses determine if wholesale banking is the right choice.

Pros of wholesale banking

• Access to large-scale financing: Institutions can raise hundreds of millions of dollars through syndicated lending or bond markets.

• Tailored financial services: Solutions are customized to industry, geography, and business model.

• Global capabilities: Leading wholesale banks operate across continents, with global trade and compliance expertise.

• Risk mitigation tools: Clients can access hedging, insurance, and modeling to reduce exposure.

• Regulatory rigor: CRA-designated wholesale banks are closely regulated, particularly in terms of community reinvestment and capital adequacy.

Cons of wholesale banking

• Not suitable for small businesses: Wholesale banking is typically reserved for clients with complex or high-volume needs.

• Service complexity: Requires experienced in-house financial teams to navigate.

• Legacy systems: Many large banks continue to rely on outdated platforms.

• Market-dependent: Volatility, rising interest rates, and macroeconomic trends can reduce access to credit or slow M&A activity.

Wholesale banking licence in the US

The United States does not have a separate wholesale banking license. Banks offering wholesale services must operate under a national or state banking charter, regulated by the Office of the Comptroller of the Currency (OCC), the Federal Reserve, or a relevant state banking authority.²

Foreign banks must also register with US regulators and may operate through federally licensed branches, agencies, or subsidiary banks, subject to oversight under the International Banking Act.³

All wholesale banks must comply with regulatory requirements related to capital adequacy, liquidity, and anti-money laundering (AML) standards as outlined by the Bank Secrecy Act (BSA) and enforced by FinCEN, OCC, and other federal agencies.⁴

Consider Airwallex for your business’s global financial operations 

Wholesale banking services are built for institutional clients, but today, growing businesses need access to global tools without the wholesale price tag or entry barrier.

Alternative institutions, such as Airwallex, offer similar services designed for businesses of all sizes. The Airwallex Business Account is an all-in-one platform for SMEs and enterprises seeking to grow their global footprint, with products that mirror some services offered by wholesale banks:

• Multi-currency accounts with local bank details: With Airwallex, there’s no need to open bank accounts in markets where you operate. You can instantly open a local currency account in more than 60 countries and start receiving funds in 23+ currencies.

• Foreign exchange risk management: Airwallex’s FX solutions minimize currency risk by locking in FX rates and tailoring settlement dates to suit your business requirements. This enables you to manage both short-term risks associated with cross-border payments and long-term risks stemming from extended contracts and other financial commitments.

• Multi-entity management: Airwallex gives you a central platform to manage finances for your global entities. Instead of viewing each market’s local bank dashboard, you get a unified view of your global finances. You can also create global spend controls across your organization and review and approve global expenses in one place.

On top of these, Airwallex has solutions to support your business’s day-to-day operations through:

• Fast, cost-effective international transfers: When using local payment rails, you pay zero or near-zero fees for international transfers to 120+ countries. 95% of transfers arrive on the same day.

• Unlimited virtual and physical debit cards: The Airwallex Corporate Card offers zero foreign transaction fees. You can earn up to 1.5% cashback on eligible purchases (terms and conditions apply).

• Expense management: instantly view, monitor, and approve employee expenses through our built-in Expense Management platform.

• Bill payments: Bill Pay automates your local and international bill payments. Upload, approve, pay, and reconcile your invoices all within your Airwallex Business Account.

• Accounting software integrations: If you use Xero, Netsuite, or QuickBooks, you can integrate these with Airwallex and automate your monthly reconciliation.

We help over 150,000 businesses worldwide simplify their global financial operations. Open a free Airwallex Business Account today or contact our team to discover how Airwallex can support your 2025 growth targets.

Frequently asked questions (FAQ)

1. What kinds of licenses do wholesale banks operate under in the U.S.?

There is no separate wholesale banking license in the US. Banks that offer wholesale services must operate under a national charter (regulated by the OCC) or a state banking license (regulated by state authorities and often supervised by the Federal Reserve). Foreign banks may operate in the United States under the International Banking Act through federally licensed branches or subsidiaries.

2. Do wholesale banks serve small and midsize businesses (SMBs)?

Generally, no. Wholesale banks typically serve large corporations, financial institutions, and government entities. However, some banks offer commercial or middle-market banking services through separate business divisions that may support SMBs.

3. Why is treasury management important in wholesale banking?

Treasury management enables organizations to manage liquidity efficiently, optimize working capital, and mitigate financial risk. For wholesale banking clients, who often handle high-value, cross-border, or time-sensitive transactions, treasury functions such as cash flow forecasting, FX hedging, and short-term investments are essential.

4. How are wholesale banks regulated in the US?

Wholesale banks are regulated by agencies such as the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and state banking authorities. They must also comply with capital adequacy and liquidity standards, and meet AML and reporting obligations under laws like the Bank Secrecy Act (BSA) and regulations enforced by FinCEN.

5. Can fintechs offer wholesale-like services?

Yes. Fintech platforms like Airwallex offer services similar to those of wholesale banking, including global payments, foreign exchange, multi-currency accounts, and treasury management tools. However, fintechs cannot provide services like deposit-taking, securities underwriting, or syndicated lending unless they partner with a licensed financial institution.

Sources:

1. https://www.occ.treas.gov/topics/consumers-and-communities/cra/wholesale-and-limited-purpose-banks-under-cra.html

2. https://www.ecfr.gov/current/title-12/chapter-I/part-5

3. https://www.ecfr.gov/current/title-12/chapter-I/part-28

4. https://www.richmondfed.org/~/media/richmondfedorg/publications/research/economic_review/1979/pdf/er650103.pdf