What Is the Structure of a Commercial Bank?

A commercial bank is a financial institution that offers banking services directly to consumers, such as checking and deposit accounts. The structure of a commercial bank may be very similar to a regular organization, depending on the size of the bank. There are usually a CEO, executive directors, operations managers, internal auditors, and standard bank staff. Not all of these individuals or positions will be at a single banking location. Most commercial banks are structured in such a way that a corporate office oversees many different bank locations.

Investment banks or banking institutions engage in many high-end financial activities, such as underwriting, intermediary between investors and stock markets, or facilitating mergers between companies. Commercial banks generally do not engage in any of these activities. Their sole focus is customer service in basic banking services for personal or business use. The structure of a commercial bank, therefore, is much more limited than these larger and more involved banks. Government regulations may be less strict on commercial banks due to the fewer activities they provide for consumers.

A CEO and executive directors work at the commercial bank’s main location. The corporate office is responsible for internalizing bank regulations and enforcing policy on all its member banks. These individuals may also look for new avenues to increase money-generating activities, including finding new locations for banks. Executives may visit local bank locations, but it may not be a common activity. Their role is to oversee the entire bank’s actions and create a formal and repeatable structure in the bank.

The structure of a commercial bank also includes local bank managers who operate each location. These managers handle all problems at a local level, complete financial reports for regional or executive directors, and find ways to improve efficiency. A local manager is also the point person for implementing new rules or regulations from the corporate office. If a commercial bank does offer some consumer loans, the manager may need to review loans and other activities. This is both a quality control measure and an internal control process for the commercial bank.

Competition among banks can be quite fierce at times, especially in large markets. Individuals generally do not face many fees or costs for changing commercial banks. The structure of a commercial bank must be one that allows for the greatest customer retention possible. For example, marketing services, offering low account fees, and issuing free debit cards or other features can all be part of this structure.