Is Commercial Banking a Good Career Path? Yes! Commercial banking is a wonderful professional option that is also very cost-effective.
You will be able to work with clients and credit products such as term loans, revolving lines of credit, syndicated facilities, cash management services, and so on after gaining adequate expertise.
It opens doors to a variety of professional prospects, and with the right abilities and experience, you may work your way up to an executive position.
In this blog post, I’ll explain what commercial banking is, how it works, what career paths you might take as a commercial banker, and what the advantages of working in this field are. Regardless, in 2022, I will tell you if commercial banking is a rewarding career choice or not.
That being said, let’s take a look at what commercial banking is.
What is a commercial bank?
A commercial bank is a financial organization that accepts deposits, provides checking account services, makes various loans, and provides people and small companies with basic financial products such as certificates of deposit (CDs) and savings accounts. The majority of people do their banking with a commercial bank.
Commercial banks profit through loans such as mortgages, vehicle loans, company loans, and personal loans, which they provide and earn interest on.
Banks get their money from customer deposits, which allows them to offer these loans. Individual consumers and small to medium-sized enterprises can use commercial banks for basic banking services and products.
Checking and savings accounts, loans and mortgages, basic investment services such as CDs, and other services such as safe deposit boxes are among the services available.
Service fees and levies are how banks make money. Account fees (monthly maintenance charges, minimum balance fees, overdraft fees, non-sufficient funds (NSF) charges), safe deposit box fees, and late fees vary depending on the goods. In addition to interest costs, many loan packages have fees.
Banks also profit from interest earned by lending money to other customers. Customers’ deposits are used to fund the loans.
The bank, on the other hand, pays a lower interest rate on money it borrows than it does on money it lends.
For example, a bank may charge savings account users 0.25 percent yearly interest while charging mortgage customers 4.75 percent annual interest.
Commercial banks have typically been housed in buildings where consumers can utilize teller windows and automated teller machines (ATMs) to conduct ordinary banking transactions.
Most banks now allow their customers to undertake most of the same services online that they might do in person, such as transfers and deposits, thanks to advances in internet technology.
What is commercial banking?
Commercial banking caters to the needs of businesses, corporations, and other organizations.
Commercial banks play a crucial role in this by providing loans for consumption and investment, and the banking industry is the engine that drives a country’s economy.
Commercial banking is a fantastic option if you’re looking for a prosperous career in finance. The primary source of revenue for commercial banks is the fees they charge for their services.
Customers, for example, are responsible for repaying a loan and paying interest based on previously agreed-upon terms.
They also charge service fees, convenience fees, and transaction prices for numerous services. Most commercial banks today have a physical as well as an online presence.
Functions of commercial banks
A commercial bank’s primary function is to provide financial services to businesses and corporations.
Banks are also responsible for ensuring economic stability and long-term growth in a country’s economy. The following are the functions of a commercial bank:
Accepting deposits is one of a commercial bank’s oldest functions. For keeping money on behalf of the public, banks used to charge a commission.
Banks currently pay a little amount of interest to depositors who maintain money with them due to changes in the banking industry over time and the profitability of the business.
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Advancing credit facilities
Because it accounts for the largest percentage of annual revenue, advancing loans is a critical role for banks.
Banks typically offer high-interest short- and medium-term loans based on a proportion of cash deposits.
Due to the requirement to keep assets liquid, they do not provide long-term financing. Banks assess the borrower’s financial situation, business profitability, kind and size of the firm, and ability to repay the loan without default before providing loans to clients.
Banks do not give cash loans to their customers when they make loans to them. Instead, the bank opens a deposit account for the borrower, from which he or she can withdraw monies.
This enables the borrower to withdraw funds by check as required. The bank boosts the amount of money in circulation by creating a demand deposit in the borrower’s account without producing more money.
Customers’ cheques, dividends, interest warrants, and bills of exchange are collected and paid by commercial banks on their behalf. They also pay their clients’ insurance premiums, energy bills, rent, and other expenses.
Preparation needed before choosing a career in commercial banking
What are some things you need to do before preparing to choose a career in commercial banking?
Do your research
Learn about the institutions that offer work in the commercial banking business and the areas in which you can specialize by doing some research.
Consider the size of the institution, the number of clients you’ll be dealing with, and the daily responsibilities of each specialization to see which one appeals to you the most.
Get a degree
While someone with a high school certificate or GED could work as a commercial banker with a lot of experience, most persons looking for entry-level commercial banking jobs have bachelor’s degrees in accounting, finance, communications, or another related field.
Consider taking several math classes, particularly ones with a strong accounting concentration, as well as technology classes that teach pupils how to use spreadsheets and word processing tools.
Consider pursuing a Master’s degree
Consider acquiring a master’s degree in business administration if you want to start your commercial banking career in a more advanced position or specialty (MBA).
Taking accounting, business strategy, economics, finance, and statistics courses may enable you to begin your career dealing directly with clients, like an account manager does, rather than relying primarily on paperwork and computers.
Even if you decide not to pursue an MBA right away, you may have the opportunity to do so later in your career if you wish to develop in your area.
Gain banking or financial work experience
Even for entry-level roles, some commercial banking careers may demand both a degree and relevant experience.
To help you develop relevant skills, apply for an internship with a bank or another financial firm.
You can do an internship while you’re still in school or after you’ve graduated. Depending on the school that gives the internship, the compensation, obligations, and hours may differ.
Internships can be found on bank or institution websites, by contacting local financial companies to inquire about internship opportunities, or by contacting your school’s career development office.
Apply for jobs
Examine the available commercial banking jobs in the area where you want to work.
Read job descriptions carefully and attach all needed papers, such as a CV, cover letter, or proof of licensure, to your application.
If you get an interview, ask the hiring manager if there is any paperwork or materials you need to bring, and dress in professional business clothes.
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Different commercial banking career paths
Here are some of the options accessible to you if you want to pursue a career in commercial banking:
A credit analyst is an entry-level position in the sector that is in high demand. Before a borrower can be provided money in the banking sector, they must first be assessed, which is where a credit analyst comes in.
They assess the borrower’s present financial situation and thoroughly examine the documents submitted before submitting their files for approval.
As a credit analyst, you must examine prospective market risks such as stock exchange and regulatory changes before preparing a thorough report to assist the manager in their decision-making.
Quality Assurance Specialist
Every commercial bank performs quality control on a daily basis. As a quality assurance professional, you will ensure that every aspect of duty meets the needed quality for its functionality.
Furthermore, you will need to assess a variety of factors that contribute to an organization’s or project’s success. Implementing company and regulatory standards is one of them.
You’ll conduct a thorough audit and examine the standards of several documents.
One of the most important parts of commercial banks is the loan officer’s office. This is because disbursing loans necessitates deliberation in order to avoid putting the company’s funds in the wrong hands.
The loan officer is a representative of the commercial bank who helps people get loans.
Your job is to guide individuals and businesses through the lending procedure, ensuring that they meet the requirements for obtaining loans and bringing the necessary paperwork to qualify.
A loan officer’s average income in the United States is $56,885 per year. Furthermore, with experience and skills, you can earn more money.
Branch managers serve as general managers for the bank branches they are responsible for.
They are in charge of supervising the personnel, ensuring that employees are adequately trained, ensuring that customers’ needs are satisfied, setting sales targets, and expanding the branch in terms of income and accounts.
Branch manager roles often require a bachelor’s degree. Bank branch managers earn an average annual salary of roughly $68,000.
Commercial banker working conditions
Commercial bankers frequently work at banks or other financial institutions that are located indoors.
Meeting with clients in person, over the phone, or digitally is a common part of their day. Commercial bankers are required by many organizations to dress in business clothes, such as suits, collared shirts, and pants.
Commercial bankers may also travel to meet with clients or solicit business. Their working hours are usually between 8 a.m. and 6 p.m., or a 10-hour shift. Depending on the urgency of specific instances, commercial bankers may work nights, weekends, and overtime.
Many people begin their careers as tellers or contact center representatives and work their way up to other positions.
If you want to start at the top or advance quickly, you should get a degree in finance, business administration, or a closely related discipline first. So, is commercial banking a good career path? The answer is YES.