Banking is an umbrella term under which there are various facets of the modern day financial system. While most people classify anything related to finance as banking, it is important to know the distinctions between the different terms used in the field in order to gain a proper understanding of finances.
You may have heard the terms corporate banking and wholesale banking services during certain financial conversations. Take a look at what these terms mean and what the differences are between the two.
What is Commercial banking and Wholesale banking?
Corporate banking refers to the financial and wealth management services that are offered to corporations, small and medium-sized enterprises (SMEs) or businesses. This is often considered to be one of the most profitable forms of banking, as the commercial banks cater to the needs of entire businesses. At the end of the day, the goal of corporate banking is to assist companies in achieving their financial goals and objectives.
Wholesale banking, on the other hand, refers to transactions between a merchant bank and other financial corporations. These corporations are usually the leading names in a particular industry and are considered to be large businesses.
Thus, corporate banking deals with the needs of the SMEs and wholesale banking system deals with the bigger corporations.
Corporate banking Vs Wholesale banking: The clients
In case of corporate banking, the clients are small and medium-sized businesses that often require the help and advice of financial experts, in a bid to maximize their profit and prevent the corporation from drowning due to one small mistake. There is no limitation on the clients that commercial banks may take work for. However, the same is not true for wholesale banking.
Since wholesale banking involves the largest banks and the leading companies, government agencies, pension funds and the private companies that have the greatest turnover each year can afford it. However, any exchange or transaction between two institutional banks is also considered to be within the bracket of wholesale banking services.
Eligibility criteria
For corporate banking, you need to have proper paperwork to become designated as a corporation. If the company that you run is still not classified as a corporation, you are ineligible for the banking service.
For wholesale banking on the other hand, you either need to run a bank or some other large-scale financial institution to qualify.
Now that you know the basic difference between corporate banking and wholesale banking, you can ask your financial advisor more detailed questions about the same and proceed accordingly.
You may have heard the terms corporate banking and wholesale banking services during certain financial conversations. Take a look at what these terms mean and what the differences are between the two.
What is Commercial banking and Wholesale banking?
Corporate banking refers to the financial and wealth management services that are offered to corporations, small and medium-sized enterprises (SMEs) or businesses. This is often considered to be one of the most profitable forms of banking, as the commercial banks cater to the needs of entire businesses. At the end of the day, the goal of corporate banking is to assist companies in achieving their financial goals and objectives.
Wholesale banking, on the other hand, refers to transactions between a merchant bank and other financial corporations. These corporations are usually the leading names in a particular industry and are considered to be large businesses.
Thus, corporate banking deals with the needs of the SMEs and wholesale banking system deals with the bigger corporations.
Corporate banking Vs Wholesale banking: The clients
In case of corporate banking, the clients are small and medium-sized businesses that often require the help and advice of financial experts, in a bid to maximize their profit and prevent the corporation from drowning due to one small mistake. There is no limitation on the clients that commercial banks may take work for. However, the same is not true for wholesale banking.
Since wholesale banking involves the largest banks and the leading companies, government agencies, pension funds and the private companies that have the greatest turnover each year can afford it. However, any exchange or transaction between two institutional banks is also considered to be within the bracket of wholesale banking services.
Eligibility criteria
For corporate banking, you need to have proper paperwork to become designated as a corporation. If the company that you run is still not classified as a corporation, you are ineligible for the banking service.
For wholesale banking on the other hand, you either need to run a bank or some other large-scale financial institution to qualify.
Now that you know the basic difference between corporate banking and wholesale banking, you can ask your financial advisor more detailed questions about the same and proceed accordingly.
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