Investment Bank vs. Commercial Bank: Differences Explained

The key differences between Investment Banking and Commercial Banking (Retail Banking). I explain how investment banks and commercial banks make money, the different types of clients, services, and regulations. I also mention Universal Banks, and how they have an increasing role in the banking industry.
Most of us know what a commercial bank is. Yet few of us understand what an investment bank is. So in this video, I break down the key differences between both and share an insider perspective from my time working in Investment Banking at Goldman Sachs in NYC.
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Chapters:
0:00 -​ Intro
0:26 - Different types of clients
1:32​ - Services Offered by Commercial and Investment Banks
2:51​ - How Commercial Banks make money
4:00​ - How Investment Banks make money
5:51 - Risk & Regulation for Commercial and Investment Banks
7:49 - What are Universal Banks?
9:04 - Closing

[@KenjiExplains]

See all my Investment Banking videos here (Resume, Cover Letter, Video Interview tips and more): kzbin.info/www/bejne/gHW4gHh7n75qoM0

[@insurancebanker]

One of the best "101's" foundational explanations I see in a long time. Great job Mr. Kenji

[@DamielSmith]

Thanks Kenji. All your videos are very helpful and relevant to what I'm doing. I'm watching all of them from the first one to the most recent

[@adityasinghbisht8137]

Ur way of explanation is very nice.for the first time i watched a video without skipping. Keep up the good work bro.

[@Soritaaa]

Very nice! Really liked the examples explaining how the different types of banks made money!

[@KenjiExplains]

Thank you!

[@NestaAstern]

Thank you for proving this simple to understand the difference between commercial and investment banks.

[@joelsbaseball]

This was great. I’d like to see a video on careers in comercial banking with the perks and drawbacks. No one else seems to have that.

[@solomonbhandari-young4154]

Great video. Wish I had professors that explain like this

[@KenjiExplains]

Glad you liked it!

[@jarisstarling6696]

If I didn't know better; you would think professors are trained to make simple information complicated.

[@abhinav_a98]

Kenji, I found out about your channel yesterday, and now I'm hooked with all the quality content you are putting! Really appreciate the crisp and to the point videos you are making.

[@KenjiExplains]

Awesome, thank you for the nice comment means a lot!

[@sarthaksharma4336]

Easily understandable content, Thanks a lot sir!

[@tainuifearon7546]

This was very helpful! Thanks for the clarification

[@wafa98_67]

Thank you so much! Nobody could simply it the way you did! Amazing skills 👏🏻👏🏻👏🏻

[@sonikamathur8306]

Thankyouu soo muchh! You made the concept so simple for me. I come from a pure tech background and just starting to gain knowledge about Finance and Financial Services. Thanks for this video

[@aashwinsharma1859]

Thnx a lot man. Explained everything in a simple manner.

[@sarthakthakkar1474]

Thanks, this is a great video with detailed explanation!

[@tylerskidmore6830]

Great explanation. Thanks for sharing!

[@EvilHazeEdits]

Thank you for this video, very helpful!

[@darikmulatu3802]

Well and clarified lessons u gave us dear i appriciated you .. big up dear !!!🤛

[@lockedquincy914]

Great video thankyou for explaining it to us.

[@rockybhagat]

Wow, wonderfully explained. I always wondered what investment banks were and how they were different.

[@KenjiExplains]

Thank you!

[@stevensalim94]

Very well explained

[@moveyobodytoday]

Great breakdown Kenji, cheers

[@KenjiExplains]

Thank you Krishna!

[@davidbuchanan3738]

Best and easiest explanation I’ve seen so far. Thanks!

[@KenjiExplains]

Glad it was helpful! (helps out if you can like & subscribe if you haven't already 🙌)

[@gulreezmba3136]

Very well explained. Thank you. Just subscribed to your channel 🙂

[@KenjiExplains]

Thank you glad it was helpful!

[@sharminlikha6854]

Excellent man!

[@NicLpool]

Keep it up! Great video again

[@KenjiExplains]

Thank you Nic, appreciate it!

[@Felix-Topic]

Brilliant insight

[@kumarraja2777]

very good explanation bro

[@StellaPianowithShibaDog]

so good and so clear. thanks.

[@KenjiExplains]

Thanks for watching!

[@dyVal]

Useful beginner clip.

[@jamesperry3837]

*Fantastic.....thank you!*

[@rookie145]

very helpful thanks

[@durgamehata1618]

Good knowledge sir

[@yuvigemini]

Very Cool Video Bro..........

[@clarenceho3435]

TY for the great video. Only thing is the subtitles are missing or lagging for part of your speech.

[@vinuthithisansa4639]

thank you so much,keep goig

[@nanayoyu4305]

Wow thanks

[@riyaziaf]

hi, kenji. Can u make smthing interesting on Enrollment agents? EA as Career , growth, any niche area etc.

[@densilponting]

Tq

[@jakesimons4372]

Is it possible for a person to work in investment banking with a degree in international relations?

[@gemmabersabal9326]

Good business relationship with you and digital marketings services very nice day and I will be able to get the future

[@AviDataArchitect]

hi Kenji. which tool do you use for animating in your videos?

[@SuperPatricluvyoutub]

@5:02 Can company A directly sell shares instead through the investment bank.

[@deepakbawaskar4212]

i working with branche banking here operation plus high sales pressure...I want to be move with back end or operational work.. please guide me

[@imtinashev-ue2fq]

Wish you Success

[@NimaTareh19]

The bank doesn't need deposits to lend anymore, so the depositor is no longer part of the equation (aus at least). they can create money to lend through the central bank

[@Machaivelli]

Brilliant

[@nanayoyu4305]

Thanks they don't teach this at school

[@jameshusentoff2953]

Can I move from audit at big 4 to commercial banking

[@yola8398]

I can't thank you enough

[@torikeqi8710]

Commercial Banks also called Corporate Banks also sell services to huge corporations in terms of transfers of money and deposits but also in terms of Loan, so you are wrong when you tell they serve just mid sized companies. Also in terms of Risks, since commercial banks deal with money directly they have huge risks, especially in terms of loan given to corporates and mid sized companies. Here the financial analysis needs to be done in details with the right vertical and horizontal analysis and the right financial and performance Ratios. Bad loans can lead commercial banks to default.

[@maryanne2025]

what camera are you using...?

[@benloyd1970]

Great content. I found the sound effects annoying, however.

[@najwaaqilahbintisaad5843]

hi , can i know what facilities and function that provided by goldman sachs ? can you email it for me ?

[@man9ine40]

Which qualifications do I need to become investment banker??

[@KenjiExplains]

Top university, ideally work experience in an related field like accounting or corporate finance, and still be relatively young (ideally in university so you can apply to the internships which are the biggest feeders for full-time roles)

[@Max-gc6jq]

What about corporate banking?

[@musranxaan1591]

Can you transition from commercial banking to investment banking ???

[@KenjiExplains]

Hi it's possible, just very difficult. I'd say you need to know the right people to make that switch

[@musranxaan1591]

@@KenjiExplains one more question is it posits to move from a back office role to a front office role ?

[@vanillapillow5380]

oh i work in capital one

[@linhnguyen-eu2vo]

Who can give me brief script when he said about risk and regulation

[@KenjiExplains]

Commercial banks and investment banks don't have the same regulation. In the US, commercial banks are regulated by a bunch of different regulators including the Federal Reserve & the Federal Deposit Insurance Corporation (FIDC). As such, they have several requirements they need to meet to make sure they don't lose the hard-earned money of people like you and me. Also, the account balance of customers is fully insured by the government for up to 250,000, so it's not in their interest for the banks to lose that. On the other hand, Investment banks don't have the same degree of regulation. That's because 1) they don't deal with regular people, and 2) their services are much more personalized so they can't be effectively regulated in the same way. In the U.S., the main regulator for investment banks is the Securities and Exchange Commission (SEC). In terms of risk, a commercial bank has much lower risk exposure. Basically, the government regulations that the commercial banks must adhere to make them less prone to risk. Additionally, when you deposit your money in a savings account, not expecting to get rich with it, but rather that it's secure there. In contrast, investment banks are paid to create value for their customers by taking higher risks. Customers come to them to find investors and capital, so the nature of the business and the looser regulations makes them riskier.

[@ilynawen4741]

Do you have a book list you can share?

[@KenjiExplains]

kit.co/kenjiexplains/favorite-books

[@aryasamaya]

2% interest on deposits??? Which century are you living in? Good info though

[@skillswithsid]

Investment Banking is more volume driven, commercial banking is more tailored lower volume higher margin business.

[@prabakrankathirvel6768]

How are you I'm kp Pilipinas central? Ae? Defrnt Kp HSBC? Ae to pasntg available I'm dontad 5 pasntg central people? Your benefit

[@ErikS-]

Bank of America is both a commercial as well as an investment bank… Dont forget that they own Merrill Lynch.

[@iamnotalesbian5910]

1:12 Above $1M is enough? Ah so I am HNI... I should not go to commercial banks anymore..Investment banks here I come...

[@BrunoLuke]

Smaller, speculative stocks have endured a historically weak stretch. Investors are betting that a turnaround is finally in the works. I’ve lost about $320k within a few months, how do i take advantage of the market turnaround?

[@MarcusFred-wn3iv]

There are many interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell stocks.

[@BrunoLuke]

@@MarcusFred-wn3iv Having an investment adviser is the best way to go about the stock market right now, especially for near-retirees, I've been in touch with a coach for a while now mostly and I made over $800K within a short time

[@MarcusFred-wn3iv]

@@BrunoLuke That's impressive! I could really use the expertise of these advisors. how can I get to your advisor?

[@BrunoLuke]

@@MarcusFred-wn3iv renowned for her proficiency and expertise in the financial market, *KRISTIN GAIL CUNNINGHAM* my financial advisor, holds a broad understanding of portfolio diversification and is recognized as an authority in this domain.

[@MarcusFred-wn3iv]

@@BrunoLuke Thank you, I just checked her out and I have sent her an email. I hope she gets back to me soon.

[@xiaoqing-rosalynchen2045]

very handsome

[@MrSaxbb]

Your video would have been better if the background music wasn't louder than your voice