How Commercial Bank Financial Market Products Differ from Transaction Banking Services

1. Different client base

Transaction‑banking products are designed for corporate customers and embed financial services into every step of a company’s operating chain, including payment settlement and trade finance (letters of credit, guarantees, etc.). In contrast, financial‑market products such as Jicun Jin are created by commercial banks after packaging their own market‑trading and risk‑management capabilities and are offered to retail customers.

When a bank is a member of a gold exchange or other overseas commodity exchange that does not serve individuals directly, it can trade on that market and then sell the resulting service (market‑making) to its retail clients.

2. Different definition of “transaction”

For ordinary payment or loan services, a corporate client simply initiates a payment or borrowing action; the bank’s involvement ends quickly after the transaction is settled, with the bank mainly providing liquidity and performing a pre‑loan risk assessment. Losses, if any, are usually recovered over the long term through mechanisms such as asset preservation.

In financial‑market business, the bank acts as a market maker. It supplies retail clients with the ability to buy or sell assets while simultaneously monitoring its own position and risk exposure. Traders must continuously manage “flat‑position” operations and hedge against market movements, making the transaction an ongoing risk‑management activity rather than a one‑off settlement.

3. Different exposure to market fluctuations

Loan‑financing activities have long maturities; for example, a loan to a real‑estate developer may not default for one or two years, and any loss is realized only after a prolonged period.

By contrast, gold, foreign‑exchange, and other commodity markets exhibit high price volatility. A bank that intermediates these markets must hedge its accumulated exposure quickly to avoid further loss. For instance, if a retail client purchases 100 tons of gold from the bank, the bank’s trader may need to execute offsetting trades in the gold market to protect against price swings.

Revenue from products like Jicun Jin often comes mainly from fees or the spread between buying and selling prices.

Conclusion

The author notes that studying the financial‑services sector reveals clear distinctions between corporate‑focused transaction banking and retail‑oriented financial‑market products. In the current economic environment, retail non‑performing loans are rising, while corporate banking still dominates overall revenue. However, financial‑market trading can account for one‑third or more of a bank’s earnings, making the three segments—corporate, retail, and market‑making—complementary as market conditions shift.