Financial services
Financial Services is a term used to refer to the services provided by the financial market. Financial services is also the term used to describe organizations that deal with money management. Examples are Banks, investment banks, insurance companies, credit card companies and brokerage firms.
It is part of the financial system that provides different types of financing through various credit instruments, financial products and services.
These are the types of companies that make up the market, providing a variety of services related to money and investments. These services are the world’s largest market resource, in terms of revenue.
The challenges facing the market for these services are forcing market participants to keep up with technological advances and to be more proactive and efficient considering cost and risk reduction.
These Services have been able to represent an increasingly important financial engine and an important consumer of a wide range of commercial services and products. The current Fortune 500 has listed 40 commercial banking companies with revenues of nearly $341 billion, a modest 3% increase from last year.
Importance of Financial Services:-
It serves as the bridge that people need to better control their finances and make better investments. Financial services offered by a financial planner or banking institution can help people manage their money much better. It offers clients the opportunity to understand their goals and better plan for them.
It is the presence of financial services that allows a country to improve its economic condition so there is more production in all sectors leading to economic growth.
The benefit of economic growth is reflected in people in the form of economic prosperity in which the individual enjoys a higher standard of living. It is here that financial services allow an individual to acquire or obtain various consumer products through installment purchase. In the process, there are a number of financial institutions that also make a profit. The presence of these financial institutions promotes investment, production, savings, etc.
Characteristic:-
Customer specific: These services are usually customer-centric. The companies that provide these services study in detail the needs of their clients before deciding on their financial strategy, taking due account of cost, liquidity and maturity considerations.
Intangibility: In a highly competitive global environment, brand image is very important. Unless financial institutions that provide financial products and services have a good image and are trusted by their customers, they may not be successful.
Concomitant: The production of these services and the provision of these services have to be concomitant. Both functions, ie the production of new and innovative financial services and the provision of these services, will be performed simultaneously.
Tendency to perish: Unlike any other service, financial services tend to perish and therefore cannot be stored. They have to be supplied as required by customers. Therefore, financial institutions must ensure proper timing of supply and demand.
People-based services: The marketing of these services has to be people-intensive and therefore subject to variability in performance or quality of service.
Market Dynamics: Market dynamics largely depend on socioeconomic changes, such as disposable income, living standards, and educational changes related to the various classes of customers. Therefore, financial services must be constantly redefined and refined taking into account market dynamics.
Investment Promotion: The presence of these services creates more demand for products and the producer, in order to meet consumer demand, seeks more investment.
Savings promotion: These services, like mutual funds, provide ample opportunities for different types of savings. In fact, different types of investment options are made available for the convenience of retirees as well as senior citizens so that they can be assured of a reasonable return on investment without much risk.
Minimize the risks: The risks of both financial services and producers are minimized with the presence of insurance companies. Various types of risks are covered that not only offer protection against fluctuating trading conditions, but also against risks caused by natural calamities.
Maximizing returns: The presence of these services allows entrepreneurs to maximize their returns. This is possible due to the availability of credit at a reasonable rate. Producers can make use of various types of credit facilities to purchase assets. In certain cases, they can even opt for the lease of certain assets of very high value.
Government benefit: The presence of these services allows the government to raise both short-term and long-term funds to cover both revenues and capital expenditures. Through the money market, the government raises short-term funds by issuing Treasury Bills. Commercial banks buy them with their depositors’ money.
Capital market: One of the barometers of any economy is the presence of a vibrant capital market. If there is choppy activity in the capital market, then it is an indication of the presence of a positive economic condition. These services ensure that all businesses can acquire the right funds to boost production and eventually earn more profit.