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 stockbrokers.
It is part of the financial system that provides different types of finance through different credit instruments, financial products and services.
These are the types of companies that include the market that provide a variety of services related to money and investment. These services are the largest market resource in the world in terms of revenue.
The challenges facing this services market are forcing market participants to keep pace with technological advances and become more active and efficient, while reducing costs and risks.
These services are able to represent an increasingly important financial engine and a significant consumer of a wide range of business services and products. The current Fortune 500 lists 40 commercial banking companies with revenues of nearly $ 341 trillion, down 3 percent from last year.
Importance of financial services: –
It serves as a bridge that people need to better take over 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 customers the opportunity to understand their goals and a better plan for them.
It is the availability of financial services that enables a country to improve its economic situation, thus having more production in all sectors leading to economic growth.
The benefits of economic growth affect people in the form of economic prosperity, in which the individual enjoys a higher standard of living. Here, financial services enable a person to acquire or receive various consumer products through a rental purchase. There are a number of financial institutions in the process that also make profits. The presence of these financial institutions encourages investment, production, savings, etc.
Customer specific: These services are usually customer-oriented. The companies providing these services study the needs of their clients in detail before deciding their financial strategy, taking due account of cost, liquidity and maturity considerations.
Intangibility: In a highly competitive global environment, the brand image is very important. Unless financial institutions providing financial products and services have a good image and enjoy the trust of their customers, they may not be successful.
Accompanying: The production of these services and the provision of these services must be concomitant. Both functions, ie. the production of new and innovative financial services and the provision of these services must be performed simultaneously.
Tendency to die: Unlike any other service, financial services tend to perish and therefore cannot be stored. They must be delivered according to customer requirements. Therefore, financial institutions must ensure proper supply and demand synchronization.
People-based services: The marketing of these services must be people-intensive and therefore subject to variability in the performance or quality of the service.
Market dynamics: Market dynamics depend to a large extent on socio-economic changes such as disposable income, living standards and changes in education related to different classes of customers. Therefore, financial services must be constantly redefined and improved, taking into account market dynamics.
Investment promotion: The availability of these services creates more demand for products and the manufacturer, in order to meet the demand from the consumer, goes for more investment.
Promoting savings: These services, such as mutual funds, provide ample opportunities for different types of savings. In fact, different types of investment opportunities are offered for the convenience of retirees as well as the elderly, so that they can be sure of a reasonable return on investment without much risk.
Risk minimization: The risks of both financial services and producers are minimized by the presence of insurance companies. Different types of risks are covered, which not only offer protection from changing business conditions, but also from risks caused by natural disasters.
Maximize returns: The availability of these services allows businessmen to maximize their returns. This is possible due to the availability of credit at a reasonable rate. Manufacturers can take advantage of different types of credit to acquire assets. In certain cases, they may even go for the leasing of certain very high value assets.
Benefit for the government: The availability of these services enables the government to raise both short-term and long-term funds to cover both revenue and capital expenditures. Through the money market, the government raises short-term funds through the issuance of treasury bills. They are bought by commercial banks from the money of their depositors.
Capital market: One of the barometers of any economy is the existence of a bustling capital market. If there is a rapid activity on the capital market, this is an indication of a positive economic situation. These services ensure that all companies can acquire adequate funds to stimulate production and ultimately reap more profits.