Commercial banks offer basic banking services to consumers, with a structure that includes a CEO, executive directors, and local managers. They do not engage in high-level financial activities like investment banks, and competition is fierce. The focus is on customer retention through marketing and offering low fees and free features.
A commercial bank is a financial institution that offers banking services directly to consumers, such as checking and deposit accounts. The structure of a commercial bank can be very similar to that of a regular organization, depending on the size of the bank. There is usually a CEO, executive directors, operations managers, internal auditors, and standard bank staff. Not all of these people or positions will be in a single bank location. Most commercial banks are structured in such a way that one corporate office oversees many different banking locations.
Investment banks or banking institutions are involved in many high-level financial activities, such as underwriting, brokering between investors and stock markets, or facilitating mergers between companies. Commercial banks generally do not engage in any of these activities. Its sole focus is customer service in basic banking services for personal or business use. The structure of a commercial bank, therefore, is much more limited than these larger, more involved banks. Government regulations may be less stringent for commercial banks due to the fewer activities they provide to consumers.
A CEO and executive directors work at the main location of the commercial bank. The corporate office is responsible for internalizing banking regulations and enforcing policy across all of its member banks. These individuals may also seek new avenues to increase money-making activities, including finding new locations for banks. Executives may visit local bank locations, but it may not be a common activity. Their role is to oversee the actions of the entire bank and create a formal and repeatable structure in the bank.
The structure of a commercial bank also includes managers of local banks that operate in each location. These managers handle all issues at the local level, fill out financial reports for regional managers or executives, and find ways to improve efficiencies. A local manager is also the point person to implement new rules or regulations from the corporate office. If a commercial bank offers some consumer loans, the manager may need to review lending and other activities. This is a quality control measure and an internal control process for the commercial bank.
Competition between banks can be quite fierce at times, especially in large markets. People generally don’t face many fees or costs for switching commercial banks. The structure of a commercial bank must be the one that allows the greatest possible customer retention. For example, marketing services, offering low account fees and issuing free debit cards or other features may be part of this structure.
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