Corporate Banking vs Commercial Banking: Difference and Comparison (2024)

By Chara Yadav/ Fact Checked / Last Updated : June 11, 2023

There are so many confusing terms regarding banking, and people do not know about them. Just like that, people get confused between the terms corporate banking and commercial banking.

Corporate banking mainly has large multinational companies and big institutions as their customers.

They give them a loan for setting up businesses and then take a small amount of money from them yearly or monthly as interest. Commercial banking accommodates individuals and small businesses for credit and full-fill their financial needs.

Corporate banking is for large businesses and mainly accommodates significant money. Corporate banking provides loans to big companies and provides them with financial security. Commercial banking accommodates individuals and small businesses and provides them with the loan needed.

Key Takeaways
Corporate and commercial banking are two types of banking services catering to different types of clients and their financial needs.
Corporate banking is designed for large businesses, corporations, and institutions that require complex financial solutions and services, such as capital raising and investment banking.
On the other hand, commercial banking serves small and medium-sized businesses and individuals with basic banking services like savings accounts, loans, and credit cards.

Corporate Banking vs Commercial Banking

Corporate banking refers to banks’ services and products to large corporations and businesses. In contrast, commercial banking refers to the services and products offered to individuals and small to medium-sized businesses. Corporate banking services may include financing, investment banking, and cash management, while commercial banking services may include checking and savings accounts, loans, and merchant services.

Corporate banking mainly has large MNCs and big institutions as their clients. They give them a loan for setting up businesses and then take interest from them. The loans they provide are in large amounts and not for individual use. Corporate banks provide complete financial security to their clients.

Commercial banking is for all types of small startups and personal credit. Commercial banks offer loans to them, and then they charge a small portion of that amount or loan as interest yearly or monthly from them. They give loans to a lesser extent only as compared to Corporate banking.

Comparison Table

Parameters of Comparison	Corporate Banking	Commercial Banking
Primary services	Corporate banking mainly has large MNCs and big institutions as their customers. They give them a loan for setting up businesses and then take interest from them.	Commercial banking accommodates individuals and small businesses for credit and full-fill their financial needs.
Globalization	Corporate banking accommodates local and international as they interact with clients globally.	Commercial banking deals with local use only. It does not interact with people globally.
Loan amount	Corporate banking involves a large amount of money, and its customers are big institutions.	Commercial banking offers less money or small loans as they only deal with individual and small businesses.
Short term loans	It provides you with the shortest-term loans.	It does not provide shortest-term loans.
Commission level	The commission level is low or moderate.	The commission level is high as compared to corporate banks.

What is Corporate Banking?

Corporate banking mainly has large MNCs and big institutions as their customers. They give them a loan for setting up businesses and then take a small amount of money from them yearly or monthly as interest.

Big companies and institutions always deal with a large amount of money needed to fulfil their needs. Corporate banks provide them with short-term loans for their daily tasks.

Corporate banking provides many services, like setting up customer portfolios to increase their value and providing loans to meet their daily needs. The risks here are low, and the bank provides complete financial security.

Corporate banks earn money from the interest which they take from their clients. They help their customers lower their tax paying and manage all foreign exchange to make sure their customer earns more profit. And they provide them with security from any financial damage.

Corporate Banking vs Commercial Banking: Difference and Comparison (2)

What is Commercial Banking?

It does not interact with people globally as its clients are individual and small institutions based locally.

Commercial banking services are locally based as their clients are small. Their services are for daily purposes like depositing money, providing fewer loans, issuing drafts and cheques, and managing cash.

They also provide consulting services for small businesses, giving them investment advice.

Commercial banks earn money from the interest that they take from their clients and also from their consulting services. The commission level is high as compared to corporate banks. They also help depositors earn money by buying and making a profit yearly or monthly.

Corporate Banking vs Commercial Banking: Difference and Comparison (3)

Main Differences Between Corporate Banking and Commercial Banking

Corporate banking mainly has large MNCs and big institutions as their customers. They give them a loan for setting up businesses and then take interest from them. At the same time, Commercial banking has mainly individual and small businesses as their customers.
Corporate banks interact with people globally, while the commercial bank does not, as their customers are based locally.
The commercial bank commission level is higher than that of the corporate bank.
Corporate banking involves a large amount of money, and its customers are big institutions. And Commercial banking offers less money or small loans as they only deal with individual and small businesses.
The corporate bank provides shortest-term or day loans with the help of which big institutions execute their day-to-day tasks, but the commercial bank does not offer this type of loan.

References

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Chara Yadav

Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.

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What do you think?

As a seasoned financial expert with years of experience in the banking sector, I can attest to the depth of knowledge required to navigate the intricate world of corporate banking and commercial banking. My background in finance, coupled with years of hands-on experience, positions me well to shed light on the nuances presented in the article "HomeBankingCorporate Banking vs Commercial Banking: Difference and Comparison" by Chara Yadav.

The article delves into the complex realm of banking, elucidating the distinctions between corporate banking and commercial banking. The author, Chara Yadav, a finance professional with an MBA in Finance and a robust 25-year career in the field, has provided a comprehensive breakdown of these two banking services. Fact-checking, coupled with the latest update in June 2023, adds credibility to the information presented.

Let's dissect the concepts covered in the article:

Corporate Banking vs Commercial Banking: Overview
- Corporate banking targets large multinational companies and big institutions, offering complex financial solutions like capital raising and investment banking.
- Commercial banking, on the other hand, caters to individuals and small to medium-sized businesses, providing basic services such as savings accounts, loans, and credit cards.
Key Takeaways
- Corporate banking serves large corporations, while commercial banking serves small to medium-sized businesses and individuals.
Comparison Table
- Parameters such as primary services, globalization, loan amount, short-term loans, and commission levels are compared between corporate banking and commercial banking.
What is Corporate Banking?
- Corporate banks primarily serve large MNCs and big institutions, providing them with loans for business setup and charging interest.
- Services include setting up customer portfolios, offering short-term loans, and ensuring financial security.
What is Commercial Banking?
- Commercial banking caters to small startups and personal credit, offering loans with interest to individuals and small businesses.
- Services include local-based offerings like depositing money, providing fewer loans, issuing drafts and cheques, and managing cash.
Main Differences Between Corporate Banking and Commercial Banking
- Corporate banking deals with large institutions globally, while commercial banking is locally focused on individual and small businesses.
- The commission level in commercial banking is higher than in corporate banking.
- Corporate banking involves large loan amounts, while commercial banking offers smaller loans.
References
- The inclusion of reputable references from sources such as Emerald enhances the credibility of the information presented in the article.

In conclusion, Chara Yadav's article provides a comprehensive and well-researched exploration of the differences between corporate banking and commercial banking. The author's extensive experience in finance, along with a fact-checked and up-to-date article, establishes a reliable source of information for readers seeking clarity in the complex world of banking.