Introduction of Financial Services

8/8/2019 Introduction of Financial Services

1/4

Introduction of Financial Services

Financial services refer to services provided by the finance industry. The finance industry encompasses a

broad range of organizations that deal with the management of money. Among these organizations are

banks, credit card companies, insurance companies, consumer finance companies, stock brokerages,

investment funds and some government sponsored enterprises. As of 2004, the financial servicesindustry represented 20% of the market capitalization of the S&P 500 in the United States

Banking services

The primary operations of banks include:

y Keeping money safe while also allowing withdrawals when neededy Issuance of checkbooks so that bills can be paid and other kinds of payments can be

delivered by posty Provide personal loans, commercial loans, and mortgage loans (typically loans to

purchase a home, property or business)y Issuance of credit cards and processing of credit card transactions and billingy Issuance of debit cards for use as a substitute for checksy Allow financial transactions at branches or by using Automatic Teller Machines (ATMs)y Provide wire transfers of funds and Electronic fund transfers between banksy Facilitation of standing orders and direct debits, so payments for bills can be made

automaticallyy Provide overdraft agreements for the temporary advancement of the Bank's own money

to meet monthly spending commitments of a customer in their current account.y Provide Charge card advances of the Bank's own money for customers wishing to settle

credit advances monthly.y Provide a check guaranteed by the Bank itself and prepaid by the customer, such as a

cashier's check or certified check.y Notary service for financial and other documents

Other types of bank services

y Private banking - Private banks provide banking services exclusively to high net worthindividuals. Many financial services firms require a person or family to have a certainminimum net worth to qualify for private banking services.[2]Private banks often providemore personal services, such as wealth management and tax planning, than normal retailbanks.[3]

y Capital market bank- bank that underwrite debt and equity, assist company deals(advisory services, underwriting and advisory fees), and restructure debt into structuredfinance products.

y Bank cards - include both credit cards and debit cards. Bank OfAmerica is the largestissuer of bank cards.

y Credit card machine services and networks - Companies which provide credit cardmachine and payment networks call themselves "merchant card providers".


2/4

Foreign exchange services

Foreign exchange services are provided by many banks around the world. Foreign exchangeservices include:

y Currency Exchange - where clients can purchase and sell foreign currency banknotes.y Wire transfer - where clients can send funds to international banks abroad.y Foreign Currency Banking - banking transactions are done in foreign currency.

Investment services

y Asset management - the term usually given to describe companies which run collectiveinvestment funds. Also refers to services provided by others, generally registered with theSecurities and Exchange Commission as Registered Investment Advisors.

y Hedge fund management - Hedge funds often employ the services of "prime brokerage"divisions at major investment banks to execute their trades.

y Custody services - the safe-keeping and processing of the world's securities trades andservicing the associated portfolios. Assets under custody in the world are approximately$100 trillion.[4]

Insurance

y Insurance brokerage - Insurance brokers shop for insurance (generally corporate propertyand casualty insurance) on behalf of customers. Recently a number of websites have beencreated to give consumers basic price comparisons for services such as insurance, causingcontroversy within the industry.[5]

y Insurance underwriting - Personal lines insurance underwriters actually underwriteinsurance for individuals, a service still offered primarily through agents, insurancebrokers, and stock brokers. Underwriters may also offer similar commercial lines ofcoverage for businesses. Activities include insurance and annuities, life insurance,retirement insurance, health insurance, and property & casualty insurance.

y Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect them fromcatastrophic losses.

Other financial services

y Intermediation or advisory services - These services involve stock brokers (private clientservices) and discount brokers. Stock brokers assist investors in buying or selling shares.Primarily internet-based companies are often referred to as discount brokerages, althoughmany now have branch offices to assist clients. These brokerages primarily targetindividual investors. Full service and private client firms primarily assist and executetrades for clients with large amounts of capital to invest, such as large companies,wealthy individuals, and investment management funds.


3/4

y Private equity - Private equity funds are typically closed-end funds, which usually takecontrolling equity stakes in businesses that are either private, or taken private onceacquired. Private equity funds often use leveraged buyouts (LBOs) to acquire the firms inwhich they invest. The most successful private equity funds can generate returnssignificantly higher than provided by the equity markets

y Venture capital is a type of private equity capital typically provided by professional,outside investors to new, high-potential-growth companies in the interest of taking the

company to an IPO or trade sale of the business.y Angel investment - An angel investor or angel (known as a business angel or informal

investor in Europe), is an affluent individual who provides capital for a business start-up,usually in exchange for convertible debt or ownership equity. A small but increasingnumber of angel investors organize themselves into angel groups or angel networks toshare research and pool their investment capital.

y Conglomerates - A financial services conglomerate is a financial services firm that isactive in more than one sector of the financial services market e.g. life insurance, generalinsurance, health insurance, asset management, retail banking, wholesale banking,

investment banking, etc.A

key rationale for the existence of such businesses is theexistence of diversification benefits that are present when different types of businessesare aggregated i.e. bad things don't always happen at the same time. As a consequence,economic capital for a conglomerate is usually substantially less than economic capital isfor the sum of its parts.

y Debt resolution is a consumer service that assists individuals that have too much debt topay off as requested, but do not want to file bankruptcy and wish to payoff their debtsowed. This debt can be accrued in various ways including but not limited to personalloans, credit cards or in some cases merchant accounts. There are manyservices/companies that can assist with this. These can include debt consolidation, debtsettlement and refinancing.


4/4

Documents

Introduction of Financial Services