• Commercial banks manage financial transactions for individuals and businesses.money money image by Valentin Mosichev from Fotolia.com
  
  Commercial banks are financial entities that accept deposits and provide loans for individuals and businesses. The term "commercial bank" came into common usage as a way to distinguish this type of financial institution from an investment bank, which primarily manages securities for governments and corporations by underwriting their financial activities.
  
  

Run for Profit

• Commercial banks are operated with the objective of making a profit. Their fee structure and interest rate is designed with the intention of making money for owners and shareholders. This characteristic of commercial banks contrasts with the primary function of credit unions, which are nonprofit community institutions that help individuals and businesses manage their money. Commercial banks make money by charging clients who use their services and borrow their funds. Credit unions charge for bank accounts and loans as well, but they charge less because their fee structure is designed to cover their costs, rather than also making a profit.
  
  

Privately Owned

• Commercial banks are owned by private individuals or collections of private individuals acting as shareholders. They are regulated by government institutions and must follow all applicable laws, but they are not owned by the government. Except under unusual circumstances such as the 2008 financial bailout, the private individuals who run commercial banks are responsible for major policy decisions. Unlike credit unions, where depositors automatically become members and stakeholders by joining and making deposits, shareholders in commercial banks must invest money specifically in ownership by purchasing stock.
  
  

Primarily Interested in Working with Businesses

• Commercial banks sometimes offer products and services to individuals, but their primary interest is in working with businesses; in fact, commercial banks are also sometimes known as "business banks." Banking services offered to individuals are sometimes referred to as "retail banking," because they are often small scale transactions. Business accounts tend to involve larger sums of money, and the fees and profits that commercial banks reap from them tend to be greater.