Commercial Banking vs Retail Banking

Walk into any large bank and you are standing in two businesses that share a brand, a balance sheet and a lift. Retail banking is the one you can see: the branches, the app, the cards, the home loans, the millions of customers who are each a small part of the whole. Commercial banking is upstairs and out of sight — a few thousand business customers, each a large part of the whole, each with a file, a relationship manager and a credit analyst who has read their last three years. What Jobs Banks Hire For maps the whole building; this page is the comparison between its two lending floors.

This is the real difference, and everything else follows from it. A retail credit decision is made by a scorecard. The bank has seen millions of borrowers like this one, knows how borrowers with this income, this deposit, this history and this postcode behaved, and scores the application against them. A person sees it only when the score lands in a band that needs a look, or when a rule fires. This is not laziness; it is the right way to decide a million small, similar things, and the model is usually better at it than any one banker would be.

A commercial credit decision cannot be made that way, because no two businesses are similar enough. A joinery firm and a dairy farm and a listed retailer share almost nothing a model could score; what they share is that someone has to read them. So a credit analyst reads the three statements in order, asks the Three Questions, writes a paper with the answer in its first sentence, and a person with delegated authority signs it or does not. The unit of retail is a product sold to many; the unit of commercial is a file read once.

A retail customer meets the bank through a product: the account, the card, the mortgage, priced from a rate card and serviced through a channel. A commercial customer meets the bank through a person — the relationship manager — who knows the business, brings its requests to credit, and is measured on whether the relationship grows and holds. The facilities are structured rather than chosen from a menu: a working capital line sized to a cash conversion cycle, a term loan shaped to an asset's life, covenants set to the business's own numbers. Pricing is negotiated inside a margin the desk works out from the risk grade, and the customer is reviewed every year by someone who reads the accounts again. The borrower's side of that relationship is what How Banks Read You describes.

Retail has more seats and a faster start. The personal banker in a branch is the bank's biggest single job, and the ladder from it runs through team leadership, branch and regional management, or sideways into product, digital and operations, where the scale of retail makes the interesting problems. What retail does not build, because the model does it, is the skill of reading a business.

Commercial has fewer seats and a longer apprenticeship, and the apprenticeship is the point. The career path runs analyst, lender, then the fork between holding a portfolio and holding credit authority; the senior seats pay more than their retail equivalents, and the craft travels — to corporate banking, to credit funds, to advisory, to running a business yourself. The most common route in from retail is through business banking, the small-business segment where a personal banker first sees a company's accounts; the crossing is made the day you can read three statements in order, and the interview is built to test exactly that.

Three places. Business banking, the segment between them, where small facilities are partly scored and partly read and a banker in a branch does both. Property, where a home loan and a business loan can be secured on the same building and the only question is whether a person or a business is repaying it. And the owner: a commercial customer's personal guarantee reaches into their retail life, and a commercial desk that reads the owner's own position is doing, by hand, what the retail scorecard does by model.

Choose retail if you like people, process and scale, and want a career whose interesting problems are about serving many well. Choose commercial if you want to read a business, form a view and be answerable for it — if the question that holds you is whether this company, with these people, through this cycle, pays the money back. The week on the desk shows what the second one looks like on a Tuesday. The comparison with the floor above commercial is here, and with investment banking here.