Financial services can be defined as the products and services offered by institutions. The Concept of Financial Services is Explain – their Meaning, Definition, Functions, Characteristics or Features, and Scope. Like banks of various kinds for the facilitation of various financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities, and money management as well as providing information on the stock market and other issues like market trends.
Meaning of Financial Services is the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.
Their companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City, and Tokyo.
Services and products provided to consumers; and businesses by financial institutions such as banks, insurance companies, brokerage firms, consumer finance companies, and investment companies all of which comprise the financial services industry.
Facilities such as savings accounts, checking accounts, confirming, leasing, and money transfer, provided generally by banks, credit unions, and finance companies. Financial Services may simply define as services offered by financial and banking institutions like the loan, insurance, etc.
The financial services concerns with the design and delivery of financial instruments and advisory services to individuals and businesses within the area of banking and related institutions, personal financial planning, investment, real assets, and insurance, etc.
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.
The following functions of financial services below are;
The following Characteristics and Features of Financial Services below are;
They are usually customer focused. The firms providing these services, study the needs of their customers in detail before deciding their financial strategy, giving due regard to costs, liquidity and maturity considerations. Financial services firms continuously remain in touch with their customers, so that they can design products that can cater to the specific needs of their customers.
The providers of financial services constantly carry out market surveys so they can offer new products much ahead of need and impending legislation. Newer technologies are being used to introduce innovative, customer-friendly products and services which indicate that the concentration of the providers of financial services is on generating firm/customer-specific services.
In a highly competitive global environment, brand image is very crucial. Unless the financial institutions providing financial products; and services have a good image, enjoying the confidence of their clients, they may not be successful. Thus institutions have to focus on the quality and innovativeness of their services to build up their credibility.
Production of financial services and the supply of these services have to be concomitant. Both these functions i.e. production of new and innovative services and supplying of these services are to perform simultaneously.
Unlike any other service, they do tend to perish and hence cannot be stored. They have to supply as required by the customers. Hence financial institutions have to ensure proper synchronization of demand and supply.
The market dynamics depends to a great extent, on socioeconomic changes such as disposable income, the standard of living and educational changes related to the various classes of customers.
Therefore, they have to constantly redefine and refine taking into consideration the market dynamics.
The institutions providing their services, while evolving new services could be proactive in visualizing in advance what the market wants, or being reactive to the needs and wants of their customers.
The following scope of Financial services, and cover a wide range of activities. They can broadly classify into two, namely:
Traditionally, the financial intermediaries have been rendering a wide range of services encompassing both capital and money market activities. They can group under two heads, viz.
The traditional services which come under fund based activities are the following:
Financial intermediaries provide services-based on non-fund activities also. This can calls “fee-based” activity. Today customers, whether individual or corporate, not satisfy mere provisions of finance. They expect more from their companies. Hence a wide variety of services, are being provided under this head.
Besides the above traditional services, the financial intermediaries render innumerable services in recent times. Most of them are like the non-fund based activities. Because of the importance, these activities have been in brief under the head “New-financial-products-and-services”. However, some of the modern services provided by them are given in brief hereunder.