A commercial or 'full-service bank' offers a broad range of financial services to both individuals and businesses.
Commercial banks raise funds by accepting deposits from individuals and businesses usually by certificates of deposit, checking and savings accounts.
The banks then lend the money to other individuals and businesses as business loans, personal loans, student loans, auto loans, mortgages and credit cards. The banks charge and earn interest on all these loans.
Commercial banks also purchase bonds, including government bonds, to finance public debt.
Over the past decade there has been increasing convergence between the business activities of investment banks and commercial banks due to the deregulation of the financial sector.
Some investment and commercial banking institutions compete directly in money market operations, project finance, private placements, financial advisory activities and underwriting.
With further consolidations, globalization, deregulation and diversification the banking industry will become even more complex and diverse.
The current challenges to commercial banking reflect the importance of efficient data technology:
|Correspondent Banking||Financing Services|
|Financial Product||Merchant Services|
|Off-Balance-Sheet Activities||Trade Finance|
|Deposit Accounts||Financial Reporting|