A Commercial Bank is a type of financial institution that is responsible for catering to everyday banking needs.
Commercial Banking is also sometimes referred to as Retail Banking.
This is the kind of bank that individuals go to for their everyday financial needs. While most commercial banks have physical branches spread across cities, there has been a trend towards banking on the Internet.
What does a Commercial Bank Do?
This type of bank provides:
- The facility to open a bank account
- Transfer money from one account to another by Internet Banking, wire transfer, or other
- To buy fixed deposits
- To cash or issue a cheque or bank draft
- To apply for an overdraft
- To apply for a credit card
- To exchange Currency
- Sales of Financial Products Like Insurance and funds
- Safety Deposit Boxes
Additionally, Commercial Banks also provide:
- Secured Loans (such as Mortgage and Auto Loans)
- Unsecured Loans (such as lines of credit, credit cards, bank overdrafts and educational loans)
These days there is a push towards financial advisors in Commercial banks who provide personalized service to the clients. These advisors know every single product the client has with the bank, and works on efficiently managing the clients’ banking needs.
Types of Accounts in a Commercial Bank
- Chequing Accounts – Everyday transactional account where money is deposited and withdrawn on a regular basis. Interest Rate is almost negligible on this type of account.
- Savings Accounts – An account that caters specifically to the individual’s savings needs. Normally has a higher interest rate. Used for short-term savings. Paying for things from this account normally incurs charges.
- Money Market Accounts – An account that puts the money in short term government and corporate securities. It normally has a much higher interest rate, and a higher minimum initial deposit. There are generally no time constraints on withdrawals.
- Time-Deposits – An account that invests in fixed income securities for a certain period of time. This type of account has the highest interest rate, but there is a minimum amount needed initially, and your money is tied in for the period of the deposit. Taking the money out earlier incurs fees.
Some Commercial Banks in North America
United States of America
- Bank of America ( BAC:NYSE)
- Capital One ( COF:NYSE)
- Citibank ( C:NYSE)
- First National of Alaska ( FBAK:OTC)
- Franklin Bank ( FNNB :OTC Pink)
- Huntington Banks ( HBAN : NASDAQ)
- JP Morgan ( JPM: NYSE)
- People’s Bank ( PEBO:NASDAQ)
- Wells Fargo ( WFC:NYSE)
- Bank of Montreal (BMO:TSE , BMO:NYSE)
- Canadian Imperial Bank of Commerce (CM:TSE, CM:NYSE)
- Royal Bank of Canada (RY:TSE, RY:NYSE)
- Toronto Dominion Bank (TD :TSE, TD:NYSE)
Commercial Banks are necessary financial institutions that keep the economy going by providing vital services that people make use of every day.