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?

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 an enthusiast with a deep understanding of banking and finance, let me delve into the concepts discussed in the article "Home Banking Corporate Banking vs Commercial Banking: Difference and Comparison" by Chara Yadav.

The article primarily focuses on differentiating between corporate banking and commercial banking, catering to distinct clients and their financial needs. I'll break down the key concepts discussed:

Corporate Banking:

Clientele:
- Large multinational companies and big institutions are the primary customers.
- Provides loans for business setup with interest payments.
- Loans are in substantial amounts, not for individual use.
Services:
- Offers comprehensive financial solutions like financing, investment banking, and cash management.
- Provides short-term loans for daily tasks of big companies.
- Aims to provide complete financial security to clients.
Globalization:
- Interacts with clients globally, accommodating both local and international needs.
Revenue Generation:
- Earns money through interest payments.
- Helps clients manage foreign exchange and optimize tax payments.

Commercial Banking:

Clientele:
- Accommodates individuals and small businesses for credit and financial needs.
- Offers smaller loans to local clients with interest payments.
Services:
- Basic banking services include savings accounts, loans, credit cards, and merchant services.
- Services are locally based for daily purposes.
Globalization:
- Primarily deals with local clients and does not interact with people globally.
Revenue Generation:
- Earns money through interest payments and consulting services for small businesses.
- Higher commission level compared to corporate banks.

Key Differences:

Client Base:
- Corporate banks serve large institutions, while commercial banks cater to individuals and small businesses.
Global Interaction:
- Corporate banking interacts globally; commercial banking focuses locally.
Commission Level:
- Commercial banks have a higher commission level than corporate banks.
Loan Amount:
- Corporate banking involves larger loan amounts, catering to big institutions.
- Commercial banking offers smaller loans for individual and small business use.
Short-Term Loans:
- Corporate banks provide shortest-term loans for daily tasks; commercial banks do not offer this type of loan.

References:

In conclusion, Chara Yadav's article effectively clarifies the distinctions between corporate and commercial banking, providing valuable insights into the services, clientele, and operational aspects of these two banking sectors.