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Banking : Commercial vs Corporate vs Retail Banking

Note: please find examples below

Banking Industry is a network of various financial institutions licensed by the government to provide banking services. The primary functions include extending, transferring, storing credit, and managing the risks associated with holding various forms of wealth.

The main banking terms that you should know are as follow:

1) Commercial Banking refers to providing banking products and services to institutional customers like corporations, institutions, and sometimes governments. The different services offered by commercial banks are:

• Merchant services: credit card processing, mobile payment solutions, gift cards, and electronic check services.

Global trade services: foreign exchange, financing, letters of credit, and global payments

Treasury management services: fund collecting(from vendors, OR for New project /investment ) and disbursement, and fraud prevention.

Lending services: working capital for businesses, commercial real estate lending, equipment financing, and other types

• Retirement products and services and Employee stock ownership plans

• Insurance products designed for corporations and institutions

• Advisory services.

2) Retail Banking refers to the offering of banking services to retail customers. The main banking services provided to the retail consumers are savings accounts, checking accounts, consumer lending, credit cards, debit cards, mortgages, e-banking services, phone-banking services, insurance, investment, and fund management.

Retail Banking services can be accessed from local branches of banks which deliver all the banking facilities to retail consumers.

3) Corporate Banking is providing various banking solutions, such as credit management, cash management, asset management, and underwriting services to large corporations as well as to small and medium-sized enterprises (SMEs). The different services provided by banks are:

• Loans and other credit products

Treasury and cash management services for managing the working capital

(managing fund for regular intervals called working capital)and currency conversion.


• Customized loans and leases for a range of equipment used by companies

• Employer services such as payroll and group retirement plans

• Asset Management

• Underwriting Services

4) Private banking is providing banking services to high-net-worth individuals (HNWIs) with high levels of income or sizable assets. The services provided include investing and portfolio management, tax services, insurance, and trust and estate planning.


Purpose of Corporate Banking The primary purposes of corporate banking include raising capital and managing credit for their corporate clients. A major component of corporate banking involves the development of investment instruments such as stocks and bonds. Other services can include cash management, credit financing, loan underwriting and compliance with government financial reporting regulations. The separation of corporate banking from consumer or commercial banking services enables the financial experts in these fields to focus on meeting the needs of corporate clients.

Examples of Corporate Banking Corporate banking offers funding to corporations and institutional customers through debt issues, structured financial products or other investment instruments. These instruments can include bridge loans and letters of credit. For example, a C corporation might use a bridge loan for a quick infusion of capital until another source of financing is finalized. A letter of credit assures the recipient that, if the corporation fails to repay a loan, the bank issuing the letter of credit will repay the loan.

Purpose of Commercial Banking The term "commercial banking" covers services banks offer to individuals and small businesses. Commercial banks manage checking and savings accounts for individuals and small businesses, as well as provide credit for borrowers. Small businesses obtain needed credit from commercial banks for business loans. Commercial banks also invest in credit instruments such as government or municipal bonds. These bonds often deliver steady return rates that keep pace with inflation.

Examples of Commercial Banking One of the primary examples of commercial banking is how commercial banks serve as primary lenders on nearly every type of consumer credit. Commercial banks make loans to individuals on such items as auto loans, credit cards and home mortgages. Commercial banks also provide lines of credit to small businesses for equipment loans, construction loans and mortgages on commercial property. These banks also help depositors earn more on their money through instruments such as certificates of deposit, money market accounts and interest-bearing checking and savings accounts.

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