What are Corporate Credit Cards? – Different Types of Cards
April 3, 2025
Credit cards have been a great financial innovation that has revolutionized personal banking. As far as retail banking is concerned, credit cards offer one of the best returns on investment for banks. Credit card divisions at most banks have been growing at a rapid pace. Over time, commercial banks realized that there is no need…
Banking activity is generally considered to be risky. Banks earn money by borrowing money from people and then lending them to other people at a higher rate of interest. However, commercial banking activity is considered to be even riskier. This is generally because of the huge dollar value of the transactions in commercial banking. Hence,…
The business model behind commercial banking practice has completely changed over the years. Earlier, commercial banks were heavily dependent upon branch banking. Branches that served corporate customers were thought of as being an asset. As a result, it was common for corporate banks to advertise these branches to prospective clients. However, over the years, the…
In the previous article, we studied what relationship banking is and how it is different as compared to transactional banking. The relationship banking model has become very popular, particularly in the field of commercial banking. It is important to understand the pros and cons of relationship banking in order to have enough information to make a better decision.
The pros and cons of relationship banking have been mentioned below:
Relationship banking offers several benefits to its clients. The most popular benefits have been listed below:
Hence, the best way to provide personalized services is to ensure that a bank’s representative completely understands the business model of the corporate as well as their banking needs. Since commercial banking is not about selling standardized products, it is difficult to imagine any other model being used in such a context.
Hence, the relationship manager can help the corporation seamlessly follow the process. In many cases, they even perform administrative tasks on behalf of the client. Hence, clients have access to priority customer service and all their issues and queries are resolved in the shortest possible time. Since corporate customers are unlikely to stay with a bank unless they get top-notch service, relationship banking is an appropriate business model, given the situation.
The various disadvantages of relationship banking must also be considered while making a decision. Some of the major disadvantages have been mentioned below:
However, in reality, relationship bankers face a lot of pressure to increase their sales. As a result, they tend to push more and more products to the customer regardless of whether it is beneficial to the customer or not. Hence, having a relationship manager is like having a salesman within the premises of the company.
The fact of the matter is that relationship banking is the predominant business model as far as commercial banking is concerned. However, there are certain cons related to relationship banking that potential clients must be aware of.
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