COMMERCIAL BANKINGby DollarBillionaire™
High-Performance Individuals understand banking and the various types of banks that exist. Here we define what Commercial Banking is and give a broad overview of how these banks operate.
COMMERCIAL BANKING (Consumer Banking / Personal Banking / Retail Banking)
In this Teaching Document, you will find the DollarBillionaire ™ Guidance Notes on Commercial Banking.
Written by Barron Hall. Revised and Updated Tuesday 06 August 2019.
Table of Contents: [toc]
COMMERCIAL BANKING DEFINITION
Commercial Banking is the provision of general banking services directly to the public. These services include providing ATM Cards, Debit Cards, Credit Cards, Checking Accounts, Savings Accounts, Mortgage Loans, Personal Loans, and Certificates of Deposit. Commercial Banking is also known as Consumer Banking or Personal Banking or Retail Banking.
What is “Commercial Banking”
Commercial Banks deal directly with the general public. Commercial Banking is also known as Personal Banking or Consumer Banking or Retail Banking. Commercial Banks have vast numbers of branches to give the public ready access to the Commercial Bank. Commonly, banks that carry out Commercial Banking also carry out other forms of banking, like Investment Banking. Commercial Banks bring in deposits from their customers and in turn, they are enabled to extend loans. An example of a Commercial bank is JP Morgan Chase.
Commercial Banking Services
Primary Service 1: Reducing the Money Supply – Accepting Deposits
Checking Accounts / Current Accounts
Certificates of Deposit
Primary Service 2: Increasing the Money Supply – Extending Loans
Vehicle Purchase Loans
Checking Account Overdraft
Multiple Secondary Services
Agents for Insurance Companies
Foreign Exchange Services
Safekeeping of Assets
Functions of Commercial Banking
Commercial Banks provide Deposit-Taking Services, extending Credit, and various forms of Money Management. These consumer banks attempt to be a one-stop-shop for individual commercial banking clients. The main types of deposits that these banks accept are Demand Deposit (Current Accounts), Savings Deposits, and Fixed Deposits (time-based deposits). Such Personal Banks also enable transfers of money between individuals and business. They also increase and reduce the money supply when they advance loans or call in loans. These banks are expanding their range of services offered to include Retirement Planning, Stock Brokerage, Wealth Management, and Private Banking. They often act as financial agents for insurance companies. These banks also may offer safekeeping facilities.
The credit that the Commercial Banks extend to the public helps to drive the economy. Most banking consumers deal only with these commercial banks and are rarely seen inside investment banks.
Top commercial banks include JPMorgan, Wells Fargo, Goldman Sachs, Capital One, Barclays, Chase Bank, Citibank and Bank of America.
Graphic: Commercial Banking Services
Explore Types of Banks
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