Difference Between Corporate Banking and Business Banking (With Table)

Banking is ubiquitous and essential in our day-to-day life. It helps us to manage our money and gives us loans when needed. Many banking types are not familiar to all people; hence, they don’t know about it or confuse it. Corporate Banking and Business Banking are two types of banks that most people are not aware of.

Corporate Banking vs Business Banking

The difference between corporate banking and business banking is that Corporate Banking is for more complex companies or businesses to manage their company banking needs. In contrast, Business Banking is pretty similar to retail banking, and it is for smaller firms to separate someone’s banking from their business needs.

Corporate Banking is a bank that provides banking services like credit management, cash management, asset management, and many other banking services just for big business companies. Its function is like a regular bank but at a large scale for big corporates.

Business Banking is a bank that an average individual can use to separate its finance from its business finance. Its function is specially designed for small businesses and provides all banking and business needs to a business owner.

Comparison Table Between Corporate Banking and Business Banking

Parameters of ComparisonCorporate BankingBusiness Banking
Definition It is a bank that deals with corporates and big businesses.It is a bank that deals with small businesses or its owners.
TransactionIt deals with huge transactions.It deals with relatively small transactions.
AuthorityA board of directors manages it.A single owner can manage it.
Function It provides services to big businesses and works for the need of corporates.It provides general banking services for small businesses.
Credit Rating It is opened under EIN, and it is a part of corporations’ credit rating.It is opened under the SSN of the owner, and it is a part of his personal credit history.

What is Corporate Banking?

Corporate Banking is a Banking system that primarily works to provide services to corporations and big businesses. It provides services that big business corporates require to manage their large business like managing cash, doing a significant transaction, keeping a record of the daily unlimited transaction, etc.

It provides many services to the Corporates and includes credit management, cash management, asset management, corporate finance, growth management, and loan management. These services need a lot sum of money to manage. So it deals with a large sum of money as big businesses are involved with this bank.

Corporate banking is supposed to earn a lot of capital from loans. It gives loans to the business in a substantial amount that involves higher returns from the interest, and whatever service it provides, that service occurs on a large scale. So profits earned by this bank are too much high as compared to other banks.

It is opened by a corporation and big business. The control of the account is given to the board of directors or any group of members who act as the head of the company. So the decision of all banking functions is made by the agreement of all the members. Also, sometimes any member can do the banking individually on behalf of the organization.

What is Business Banking?

Business Banking is a banking system providing services to fulfill the business’s financial needs. Even a person running a small business needs to separate his bank statements and business financial needs. So for this, Business Banking is vital for any small business.

There are many features provided by Business Banking. It helps in Withdrawals and Deposits, Standing orders and direct debits, Overdraft facility, Access to credit and debit cards, Telephone banking, Online banking, Mobile app, and Accounting tools. These services help in managing a business and track of all things like expenses and taxes.

It can be opened by any individual to track its business finance and has the feature to control by any business employee. Business banking uses a fraud protection method as without this, it will be hard to track a large number of transactions done by any person from one account.

It can be managed like a regular bank of an individual. It just helps keep an individual’s expenses separate from his business, which is good for business in the long run. It is because keeping track of business expenses and profit helps make decisions related to business very quickly.

Main Differences Between Corporate Banking and Business Banking

  1. The main difference between Corporate Banking and Business Banking is that Corporate Banking is for corporations and big businesses, but Business Banking is for small businesses.
  2. Corporate Banking is managed by a board of directors or a group of individuals, whereas any one person can also use Business Banking to manage his business.
  3. Corporate Banking deals with substantial transactions. On the other hand, Business Banking deals with relatively small transactions.
  4. The service provided to Corporate Banking is specially made to manage large businesses while the benefits of Business Banking are the same as other banks and some extra features to operate a business.
  5. Corporate Banking earns large profits as it deals with a massive sum of money, whereas Business Banking deals with relatively small gains.

Conclusion

Everyone needs banking service these days, whether he is an individual or it is a large business and need of all differs from each other. So everyone needs different types of banking systems according to their needs. Like that, Corporate Banking and Business Banking are two banking systems providing various services to a diverse group of society.

Corporate Banking is for large businesses that help manage their organization smoothly. On the other hand, business banking is for small companies that help people separate their business and personal expenses. Anyone can understand his needs and select one accordingly.

References

  1. https://www.emerald.com/insight/content/doi/10.1108/02652329210012122/full/html
  2. https://www.emerald.com/insight/content/doi/10.1108/02652329810241393/full/html

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