What is Commercial Banking?


We all have some sort of experience with commercial banking services. When you needed that education loan, or when you wanted to put some money in a fixed deposit, you approached a bank. Banks typically take deposits from customers and use that to extend loans to other customers. These two are the primary services of a commercial bank. Taking in deposits is a liability for a bank, so these come under the ‘Liabilities’ division, while lending a loan is an asset and comes under the “Assets’ division. Banks have several other products within these two broad headings of assets and liabilities. A commercial bank’s suite of products include but is not limited to:

Under Liabilities:
• Current Accounts
• Savings Accounts
• Fixed Deposits
• Term Deposits

Under Assets:
• Loans
• Credit Cards
• Trade Finance
• Commercial Vehicle funding

Other Services:
• Insurance
• Investment services
• Money transfers

The career we are going to discuss is that of a Commercial Banking Relationship Manager (RM). A Commercial Banking RM is responsible for generating, maintaining and growing a bank’s customer base. The role requires knowledge of all the banking products on offer (Banks keep improvising on the type of products, credit terms and interest rates), and a penchant for understanding a customer’s requirement and matching it with the products on offer. Typically, it requires good salesmanship as well as comfort with banking products.

Key skills for an entry-level role would be:

1) Analytical mind: This job needs you to wrap your head around numbers
2) Knowledge of banking products, markets and relevant regulations: You do not need to be a genius in finance to get through a Relationship Manager role. However, you must definitely have a good working knowledge of the banking products on offer, basic banking regulations, a bit about taxation as well as financial markets
3) Sales and negotiation skills: This is a significant skill that banks look for while hiring an RM. While people can be trained about the banking products, sales skills are a little more innate in nature and will be tested in more detail during interviews
4) Strong communication & presentation skills: In this role, your primary job is to go out and meet clients, constantly interact with them and see through any transactions they may want to make. So interpersonal skills and presentation skills are very important. You also need to be able to crisply explain complex products in a lucid manner to clients who may not understand financial jargon
How to get in: 
• Most RMs are MBAs in either finance or marketing
• Most banks offer internships to first year MBA students for these kind of roles, and then offer a full time position to those showing promise
• RMs could either service retail clients or institutions
        o In case of retail clients (called Retail Banking), the products in focus are deposits, savings account, credit cards and loans. Investment services or demat accounts are also other standard offerings
        o In case of institutional clients (also called Corporate Banking), the focus is on current accounts, loans, overdrawing facilities, working capital, trade finance etc.
• The job, as mentioned above, is to bring in new business while servicing the existing customer base
• Usually, RMs are given targets by their firms which they need to work towards
• RMs also need to work on all the paperwork related to the banking services before turning them over to the operations teams in their banks
A typical day in the life of an RM (entry level):

• You take a look at all the meetings lined up for the day: you have 2 client meetings and 2 internal meetings
• You run to the first meeting and help your client (a big corporate) decide on the right terms for a 10 year loan
• On coming back, you initiate the paperwork on the loan and also a term deposit another client wants to start
• You rush to an internal meeting where the product team is discussing a new product being rolled out
• You then meet some clients who have come to the branch and solve their queries (an unscheduled meeting)
• Final meeting with a client, another internal meeting with the compliance team, some more paperwork and then you are done for the day!

     
Salary and perks:
• The starting salary for a Commercial Banking RM is around INR 7-10 Lakhs / annum depending on the bank
• MNC banks often pay higher (~INR 12 Lakhs+) along with a variable bonus

Interview with Shreya Telang, who is an RM with an MNC bank

Proschool : Please tell us about your background and qualifications
Shreya : I completed my MBA in marketing and finance (equal credits) from the Dept of Mgmt. Studies, IIT Madras. Prior to that, I did my engineering in Electronics from Pune University

Proschool : Why did you decide to pursue this career and how did you get into this role?
Shreya : I was interested in the financial domain and even more interested in a client-facing role. The idea of marketing financial products and services very much appealed to my interest in financial products as well as meeting new people. I was recruited for an internship initially, post which I was offered a full time position based on my performance

Proschool : Your current role and a typical day?
Shreya : My current role is maintaining an effective and efficient relationship with the existing client base as well as working to build new relationships. A typical day would see me meeting /interacting with clients and coordinating with internal teams to service my client requests

Proschool : High points in your career so far?
Shreya : I work in the corporate sub division of retail assets within my bank, and I have interacted with some top names in the industry. I would say these meetings were definitely a some of the high points in my career

Proschool : Challenges faced?
Shreya : Since banking is highly regulated, some client requests do not get fulfilled. In such cases, pressure from the clients as well as your own internal teams needs to be managed well. Also, sometimes the targets become difficult to meet especially when there is stiff competition for a particular product from other banks

Proschool : Outlook for the industry?
Shreya : As more and more customers are becoming internet and technology savvy, fewer of them are coming in to the branch, This means that an RM needs to be extremely proactive and inventive and use technology to his/her advantage to generate new business

Proschool : Career opportunities for aspirants in India (and elsewhere)?
Shreya : All banks need RMs to service their clients and hence the career options are unlimited

Proschool : Word of advice for aspirants?
Shreya : This field is very competitive. You must have a pleasing yet assertive personality, strong communication skills and raw smarts to survive and do well in this field