Difference Between Personal Banking and Commercial Banking

There are so many types of banking systems, such as utility, scheduled or unscheduled, indigenous, and so on. However, personal banking, as well as commercial banking, still plays a major role in society. One type is into retail customers, while the other one is into businesses.

Let’s see what distinguishes each term! 

Personal Banking vs Commercial Banking

The main difference between Personal Banking and Commercial Banking is that Personal Banking is a specially designed system to meet up the small retail customers’ needs. Meanwhile, commercial banking is a system that underscores huge profits through investments. 

Personal Banking vs Commercial Banking

Personal Banking is also known as Retail Banking defined itself, that it includes personal activities, such as personal loans, mortgages, credit/debit cards, and auto loans which are essentially small amount. On the other hand, it includes the customer’s savings, transaction facilities, and so on.

They provide their services to people instead of to big companies, corporations, or businesses. 

On the contrary, commercial banking includes the provision of financial services to the general public and business. It boosts the economy and social growth, and stability. They can work along with the public sectors as well as with the private sectors.

Their function is to accept deposits from the public, rendering loans for companies or corporations in a way to gain a huge profit. 

Comparison Table Between Personal Banking and Commercial Banking

Parameters of
Personal BankingCommercial Banking 
Meaning Personal Banking tends to help individuals with any financial services. They offer financial support to retail customers in savings, credit, short-term or long-term loans, etc.Commercial Banking provides financial services for investment and consumption that leads to profit in any way. They accord deposits from the general public and transfer the funds by lending loans to companies to make a profit.
Function The primary function of Personal banking is providing financial support, advice, managing clients’ accounts, and other services. Reduce the risk factor by lending money.The prominent functions of Commercial Banking are accepting deposits(Savings, public, recurring deposits, and fixed deposits) and offer them as loans for consumption or investment. Commercial Banking also engenders creditworthiness. 
Other namesRetail Banking and Consumer BankingMortgagee, depositary, and full-service bank 
RiskNowadays, Personal banking faces the risk of losing clients because of their increase in credit rate, operational risk in case of errors, market rate due to fluctuation, and liquidity risk. The main risk of Commercial Banking is charging the interest rate low, which causes a decrease in the Bank’s profit. By generating excess loans to consumption, investment leads to unable to pay the money by the borrowers. 
Interest RatePersonal Banking offers an affordable interest rate to its customers to evitable the cost of borrowing from other banking services. Most Personal Banking charge an interest rate around 10.5-24 per cent.Commercial Banking keeps its interest rate between 2-3 per cent. 

What is Personal Banking?

As earlier mentioned, personal banking is only for the personal cause of the client. It works based on the client’s personal interest. It helps the clients’ actions to manage their money, access to credit cards, deposition facility. 

On the other hand, banks provide services such as checking and savings accounts, mortgages, personal loans, credit/ debit cards, access to foreign currency, remittance, automobile financing, and certificates of deposit. 

Additionally, they are the sub-division of prominent banks or local community banks nearby the clients. These types of systems can be easily handled at home through an online facility. Moreover, this system is the most convenient and safe place to deposit and withdraw the client’s cash. 

Essentially, they also give big wheel services, such as enabling the customer to buy large-scale items, earn interest on their money. It is always preferred by the common man over other banking systems. As such, it renders special care to the client’s account with sufficient financial services. 

For this reason, Citibank is a good example of a personal banking system. 

What is Commercial Banking?

Commercial banking is also known as Corporate banking, as it focuses more on the corporate sector, such as government, institutions, and corporations, to earn profits.

Instead of lending contact with retail consumers, they prefer businesses and the commercial-related sector for services. 

They play a notable role in the community in boosting its capital, credit, and liquidity in the market by extending new loans and lending options. Having that in mind, they also provide their services by checking and savings accounts, loan, and mortgages. 

Furthermore, it renders basic investment services such as bill payments, transfers, CDs, protection of assets, loans, and safe deposit boxes. Their source of income is their clients, that is from the interest they acquire from the client’s money. They are widely now operated through an online mode. 

For a better understanding, the commercial banking system is none other than the banks we call ATMs. 

Main Differences Between Personal Banking and Commercial Banking

  1. Personal banking deals with individuals’ needs such as personal loans, credit, and provisions, and on the other hand, Commercial Banking gives hands for consumption and investment by lending hefty amounts as loans. 
  2. Personal Banking covers a high-interest rate(10.5- 24 per cent), whereas Commercial Banking charges a low interest rate (2-3 per cent) in order to grow the economy by consumption and investment.
  3. Personal Banking plays as a financial supporter to an individual by providing necessary finance, advice, or maintaining accounts. Commercial Banking works through accepting deposits and lending loans for investment and consumption in the case of earning profit.
  4. Personal Banking is also known as retail Banking and Customer Banking. Commercial Banking does all services by allowing deposits from the public and generating loans for creditworthiness, so also known as depositary, Full-services Banking, or mortgagee. 
  5. Personal Banking is considered to be a secured bank as they manage client’s accounts, access credit, check on certificates of Saving or deposit accounts. Commercial Banking is highly recommended to businesses as they collect types of deposits from the public and lend loans or credit to them in return for earning profit. 
Difference Between Personal Banking and Commercial Banking


Personal Banking is lending hands to personal’s financial services such as educational loans, Credit, short-term or Long-term loans, collecting savings and deposits accounts, and maintaining client’s accounts.

Commercial Banking is largely popular, which works for the growth of the economy by accepting deposits and lending them as loan for the purpose of investment and Consumption to make a profit out of it. 


  1. https://www.emerald.com/insight/content/doi/10.1108/02652329610105305/full/html
  2. https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.754
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