Banks fulfill a wide range of financial operations in order to
the financial needs of
all types of customers.
Commercial banks accept deposits and provide individuals and
businesses with loans.
This type of financial entity operates with the objective of making a
profit; commercial banks charge their customers for using their services and borrowing their
This paper will the characteristics of commercial banks operations by discussing the
services provided, the main sources and uses of funds, how these banks compete with other
financial institutions, and the effect of federal policies have on them.
Commercial banks provide a variety of financial products and services to customers.
These products and services include asset and liability products, electronic banking, and other
Asset products are auto loans, credit cards, mortgages, and personal and business loans
The interest revenue with asset products is the major contributor to profits earned
for commercial banks (King, 2011).
Liability products are certificates of deposit, checking, and
savings accounts, and other types of deposit products (King, 2011).
With the exception of
checking accounts, liability products earn interest based on the type and term of the deposit for
the depositor (King, 2011).
Electronic banking services include 24-hour ATM networks,
banking websites that allow customers access to account information, bill payments, open new
accounts, order checks, transfer fund between accounts, and wire transfers (King, 2011).
Other services include those in which customers earn fees.
This would include corporate
finance consulting, custodial services for estates and trusts, money transfer services, investment
advisory services, securities, and other valuable items safekeeping (King, 2011).