The procedures of Commercial Banking in fact includes the financial activities which can be termed as retail banking in opposition to the investment related dealings which are included in investment banking. Commercial Banking services are provided to business concerns as well as individuals.
However, Commercial Banking may also refer to the customized banking services which are rendered to large business concerns and corporations in exception to the retail banking services which are furnished to the individuals. The banking procedures involving the deposits from the large sized business organizations in addition to the commercial loans given to such bigger business concerns and corporations, may be specifically termed as Commercial Banking.
The basic functions of the Commercial Banking service providers as a rule includes the following services and products :
- The Commercial Banking providers assign current or checking and savings accounts in addition to money market accounts to individual consumers as well as business concerns in return for their deposits, these accounts in fact increase the deposits of the consumers by allowing for periodic interests.
- The Commercial Banking providers give out personal loans to individual consumers in addition to commercial loans to business concerns.
- The Commercial Banking providers furnish assistance to consumers who may either be individual or business organizations, in cases of money transactions ( cashing cheques and wire transfers).
- The Commercial Banking providers assign credit cards, debit cards and ATM cards to the personal and business account holders.
- The Commercial Banking providers asssist the consumers by storing precious items owned by them in the vaults of the banking locations.
- The Commercial Banking providers financial assistance regarding liquidating and circulating bank rolls.
Commercial Banking is very much distinct from Investment Banking for the fact that Investment Banks basically deal with the procedures which are mentioned below :
- The investment banks are responsible for providing consultation to the corporations and government organizations which approach these before issuing securities in the financial markets
- Ihe investment banks underwrite or in other words, accumulate capital for the corporations and governments which issue equity shares as well as bonds, from investors who aim for financial gains through the purchase of the different types of securities issued
- The investment banks as a result of their financial activities play the role of an intermediator between th the corporations and government organizations issuing equity and/or debt shares and the buyers of such shares
- In the procedure mentioned above, the investment banks, function as brokers for the government and larger business concerns (corporations), whose sales of the equity shares as well as the bonds they facilitate
- In their capacity as the capital raiser for larger commercial organizations, the investment banks assist the process of mergers between bigger corporations which may as well be multinational companies, in addition to helping these in reorganizing their vast structures.
Commercial Banking includes the customized banking services and the financial products which are provided by the renowned banks the world over to their customers, mainly concentrating over retail banking. Commercial Banking services are the more common of the two available methods of banking. However, a few Universal Banks or financial services companies combine the services provided by the Commercial Banking service providers and the investment service providers.