Commercial Banking vs Merchant Banking  

Commercial Banking vs Merchant BankingCommercial banking and merchant banking are two of the primary forms of banking services which offer some of the most lucrative careers in finance. Their functions can be defined separately based on the nature of financial services they offer and the clients they deal with. In the course of this article, we will discuss the kind of career prospects they offer, compensation, work-life balance and other relevant aspects. However, for sake of clarity it would be important to first define what do commercial and merchant banking stand for.

Conceptual Differences

What is Commercial Banking?

Commercial banks offer checking and savings accounts for individuals and businesses, issue debit and credit cards along with a host of retail banking services. They also offer loans to individuals and small businesses and earn through the interest levied on such credit. Commercial banks may also provide certificates of deposit and saving schemes aimed at retail customers.

What is Merchant Banking?

Merchant banks provide financial services for corporate entities including trade financing and a whole range of international financial activities. They usually cater to mid-sized corporations and can assist with underwriting of securities, raising venture capital and offer a host of trade advisory services depending on the specific needs of their clients. They primarily earn through the fee paid for their advisory services.

Commercial Banking vs Merchant Banking – Education &Skills:

  • Commercial Banking:

Having a degree in finance, mathematics or accounting would help lay down a solid foundation for someone looking to enter this field. However, pre-requisites for a career role in commercial banking could vary, depending on the nature of a specific role but excellent people and communication skills are an essential for almost any kind of banking career. Good knowledge of accounting can be a big plus and those planning for an accounting-oriented role can consider earning Chartered Public Accountant (CPA) designation, which could be a big advantage. Banking internships can be one of the best ways to acquire industry knowledge and experience for a banking career. Some of the roles in commercial banking include loan officer, credit analyst, mortgage banker, trust officer and branch manager among others. Each of them would require a different skill set to succeed in that role and different levels of responsibility for a professional and hence it would be best to prepare accordingly.

Some of the key skills needed are:

Good technology skills

Should have an eye for detail

Excellent accounting skills

Strong marketing and sales abilities

  • Merchant Banking:

Top merchant banks regularly hire from the pool of graduates and undergraduates in finance, engineering and even law. However, they prefer hiring from top MBA programs with an exceptional academic record. Merchant banking careers roles can be exceptionally competitive, requiring excellent communication skills, a flair for finance and the ability to be a great team player along with fluency in a foreign language, which can be an added asset. Acquiring a relevant certification including Chartered Financial Analyst (CFA) or Financial Risk Manager (FRM) can be of great advantage in acquiring advanced skill set required for higher merchant banking roles.

Critical skills needed for the job include:

  • Excellent analytical abilities
  • Ability to perform under pressure
  • Should be good at number-crunching
  • Strong work ethics

Commercial Banking vs Merchant Banking – Employment Outlook:

It is true that banking has seen positive developments as an industry but there are several reasons why banking jobs have been impacted in the last decade. As per the US Bureau of Labor Statistics, banking jobs have gone down by 2% between 2004 and 2014. Some of the reasons for this state of affairs include industry consolidation and an increasing reliance on technology with a sudden spurt in online banking services. This has affected the demand for bank tellers and similar job roles typically involving personal interaction with the customers. However, at the same time, there has been a rise in the demand for financial analysts, financial advisors, marketing professionals and techies who understand an entire suite of financial products offered by commercial banks and can help sell them effectively.

With the repeal of Glass-Steagall act, a new era of industry consolidation began with M&A activity involving investment banks and commercial banks. Two of the prime examples of this trend include the acquisition of Wachovia by Wells Fargo and of FleetBoston by Bank of America. This has also contributed to a slowdown in the demand for traditional banking jobs as the industry is undergoing a major transformation both in terms of the nature of services banks offer and the way they operate.

As far as merchant banking jobs are concerned, it would be relevant to add here that although theoretically defined as separate forms of banking, but few merchant banks and investment banks function purely within their technically defined limits. A number of merchant banks are also engaged in M&A activity and other investment banking roles and it follows logically that the factors affecting investment banking jobs have also contributed to a decline in jobs for merchant banks as well. Some of these factors include the industry consolidation we have already discussed above along with the credit crunch of 2008.

To sum it up, those planning to build a career in commercial or merchant banking need to acquire the competencies for emerging job roles in the banking industry to be able to make the most of it. It must be realized that as industry changes are forcing a fundamental shift in the nature of banking careers, they continue to become ever more challenging and competitive.

Commercial Banking vs Merchant Banking – Salary:

  • Commercial Banking:

Though hit hard by industry consolidation and advent of online banking services, commercial banking continues to be a major attraction for those planning to enter the banking industry. The remuneration can vary depending on the job roles and typically, roles requiring technical and people skills attract a better pay package.

Loan officer is an entry-level professional role, attracting an annual salary ranging from anywhere between $30,000 to $120,000 depending on the level of work experience.

Bank teller is more of a traditional banking role which is lesser in demand these days due to the impact of industry consolidation and a rise in banking automation. Usually, a bank teller might earn anywhere from $20,000 to $40,000 annually.

As a Branch Manager, one can earn between $40,000 to $150,000 annually. Usually an experienced professional occupies this position and can afford some great opportunities to learn about M&A activity.

Programmer is more of a technical job with comparatively better future prospects and attracts a package of around $35,000 to $150,000.

Trust Officer is more of a people skills job, fit for those with an expert knowledge of finance and interested in financial counseling for HNIs. He might earn anywhere from $45,000 to $80,000.

Sales is one of the few roles which continue to be of great relevance and can offer some of the best opportunities for building a career in banking and finance. One can earn anywhere from $30,000 to $150,000 annually. This excludes any commissions and bonuses earned.

  • Merchant Banking:

Traditionally, merchant banking has been considered one of the most rewarding careers in finance. However, several factors discussed above have impacted the job growth negatively to an extent.

Broadly speaking, the average annual salary of a merchant banker stood around $69,680 as of May 2008. This excludes significant amount of bonuses earned by a merchant banking professional. Average salaries for a merchant banker could vary depending on the location. For instance, the figures stand at $157,640 for the state of Connecticut, $129,620 for New York and at $111,750 for Washington D.C. This is why a number of individuals might look for work opportunities in certain locations with relatively better prospects.

Average salaries for some of the popular job roles in merchant banking are included here.

  • Merchant Sales Specialist $63,000
  • Business Sales Consultant $71,000
  • Experienced Sales Representative $61,000
  • Independent Sales Agent $78,000
  • Mergers &Acquisitions Analyst $41,000

Commercial Banking vs Merchant Banking – Career Pros &Cons:

Commercial Banking:


  • Some of the most popular career options in banking are offered by commercial banks. Job roles in this field accommodate people with widely differing skill sets and compensation is adequate as well.
  • Advanced educational qualifications or practical experience is not a must for some of the entry-level positions in commercial banking, which makes it more of an accessible career option for an average individual.


  • The demand for traditional job roles involving personal interaction with customers is on the decline due to industry consolidation and banking automation. Individuals with a combination of people and technical skills are preferred these days as more challenging roles emerge.
  • Perks are not among the best, at least not as competitive as in merchant banking roles. Additionally, working hours are also not what they used to be, still it is relatively better than the hours in a merchant banking role.

Merchant Banking:


  • One of the best banking career options in terms of package and bonuses, along with exciting and challenging work roles. Merchant banking is more of a high-profile career where professionals help secure major deals and facilitate raising of funds for corporations.
  • Remuneration is quite competitive right from entry-level positions and growth prospects are excellent, making it possible for a dedicated professional to rise up through the ranks to become a vice president or managing director in a firm.


  • Despite being classified as a high-profile career, the prospects in terms of pay packages and growth opportunities depend largely on the work location. It may not be possible for everyone to relocate to a hub of activity in merchant banking.
  • Very few individuals may actually be able to rise to higher management positions due to cut-throat competition in the field and fewer opportunities at the top. In fact, due to slowdown brought about by industry consolidation job growth has been impacted in last few years.
  • Working hours are longer as compared with commercial banking and amount of work stress is on the higher side, which everyone may not be able to cope with.

Commercial Banking vs Merchant Banking – Work-Life Balance:

Commercial banking offers a clear advantage over merchant banking roles as far as work hours are concerned. Given the competitive nature of job and intense involvement needed, merchant bankers usually have much longer work hours and high levels of work stress as compared with commercial bankers. Most of the merchant bankers work for six or seven days a week, spending nearly 65 to 75 hours at work. This affects the work-life balance adversely and merchant bankers lead a comparatively stressful life, spending little time with family and friends. In the long-term, this unhealthy trend can impact the health and well-being of an individual and create stress-related problems.

In commercial banking, work hours are usually confined to 50-55 hours even for higher level positions as the focus of work continues to be on standard banking hours. However, due to industry changes job roles are also increasingly redefined in commercial banks, and workers are required to spend a good amount of time after banking hours at work. This is why current-age commercial bankers may not have the ideal work life balance, still they are in a much better position as compared with merchant bankers. Commercial bankers tend to face lower level of stress-related issues than merchant bankers and lead more of a balanced life.


For dynamic, outgoing and ambitious individuals, merchant banking could be the right choice of a career option, offering an intensely competitive work engagement with some of the best industry perks. On the other hand, individuals with excellent people skills and technical know how maybe better suited for commercial banking with a relatively less stressful work existence.

Growth opportunities abound in both of these fields, however, perks, working hours and the nature of roles differ greatly, and these factors usually play a central role in choosing the right career. Merchant banking can be the preferred choice in terms of perks and bonuses, along with an exciting and challenging career path. On the other hand, commercial banking offers relatively better work-life balance and perks are not bad as well. However, commercial banking jobs are also becoming increasingly competitive with longer working hours and focus on technology-oriented roles.

Anyone planning for a career in banking, these criteria could be helpful in making the right choice. More importantly, it is about going along with the popular choice, or simply better perks, but about identifying ones individual skill sets and aptitude, to be able to choose the right work profile.

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