FINANCIAL SERVICES
Financial Services – meaning
The term financial services refer to the services rendered by the finance industry including the services provided by the agencies to manage and regulate money. Any such organization that deals with monetary transaction like Banks, financial organizations, insurance companies, credit and debit card providers are all specimens of providers of financial services. In the commercial world today, financial services are the largest industry as it covers about 20% of the earnings in the market.
Financial Services – The arrival
Financial services marked its presence felt in the United States with the Gramm-Leach-Bliley Act in the late 1990s. As a result of this law, several companies involved in different aspects of financial services merged together. Although initially there were some conflict of interests and even a few disputes, abolition of many restrictions with the above Act gave financial services the much desired impetus. The impact of the Act can be seen from the fact that today in United States all such organizations that were named as Banks, insurance companies, brokerage houses are now known as financial services institutions.
Financial Services – the merger style
Japan has gone a step ahead in this regard, allowing non-financial services companies to merge with financial services companies. The component companies maintain their independence and yet form integral parts of a corporate financial services providing group. Examples are Citigroups and JPMorgans Chase. Another form of merger of financial services is where an institution would simply create its extension divisions covering other aspects of financial services. As an example, a Bank may open its own insurance and brokerage wings to add to the financial services it provides. Examples are Wells Fargo and Washington Mutual.
Financial Services – types
Financial services are mostly related to Banks, insurance companies, brokerage and a few other service units. Normally, they provide services like safe keeping of money including deposits and withdrawals. These withdrawals are made through checkbooks issued by the financial institution. Other types of financial services are loan and mortgages, debit and credit cards, Automatic Teller Machines (ATM) transactions and use of standing instructions and direct debits. These days, financial services online are also available through E-banking and electronic fund transfer system. A popular term for this type of financial services is Internet Banking. Financial services can be provided by commercial banks or by investment banks. While commercial banks helps business raise money from other firms in form of bonds or equity, investment banks provide direct finance to commercial organizations.
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