Financial services is a term used to describe the services offered by the financial market. Financial Services is also a term used to describe money management organizations. Examples include banks, investment banks, insurance companies, credit card companies and stockbrokers.
It is part of the financial system, which offers different types of finance through various credit instruments, financial products and services.
These are the types of companies that make up the market, offering a variety of services related to money and investment. These services are the largest market resource in the world in terms of profits.
The challenges facing service markets are forcing market participants to keep pace with technological advances, and to be more proactive and efficient, while reducing costs and risks.
These services have been able to represent an increasingly significant financial engine and a significant consumer of a wide range of business services and products. The current Fortune 500 lists 40 commercial banks with nearly $ 341 trillion in revenue, up 3% from last year.
The importance of financial services: –
It serves as a bridge for people to better control their finances and make better investments. Financial services provided by a financial planner or a banking institution can help people to manage their money much better. It allows customers to better understand and plan their goals.
It is the presence of financial services that allows a country to improve its economic situation and, consequently, to increase production in all sectors that affect economic growth.
The benefit of economic growth is reflected in the people as economic prosperity, where the individual has a higher standard of living. Here are some of the ways in which financial services allow you to buy or sell different consumer products. In the process, some financial institutions also make a profit. The presence of these financial institutions promotes investment, production, savings and so on.
Customer Specific: These services are usually customer-oriented. Companies that provide these services carefully analyze the needs of their clients before deciding on their financial strategy, taking into account cost, liquidity and maturity accounts.
Intangibility: In a highly competitive global environment, brand image is crucial. Unless a financial institution that provides financial products and services has a good reputation and enjoys the trust of its customers, it may not be successful.
At the same time: The production of these services and the provision of these services must be combined. These two functions, namely the production and provision of new and innovative financial services, must be performed simultaneously.
Tendency to kill: Unlike any other service, financial services are lost and therefore cannot be saved. They must be supplied as required by customers. Therefore, financial institutions need to ensure proper synchronization of supply and demand.
People-based services: The marketing of these services must be people-intensive and therefore subject to variability in performance or quality of service.
Market dynamics: Market dynamics are largely dependent on socioeconomic changes, such as changes in disposable income, living standards, and educational changes associated with different customer classes. Therefore, financial services need to be constantly redefined and refined in the light of market dynamics.
Investment promotion: The presence of these services creates more demand for products and the producer makes more investment to meet consumer demand.
Promoting savings: These services like mutual funds offer a wide range of options for different types of savings. In fact, different investment options are offered for the convenience of both pensioners and the elderly so that they can ensure a reasonable return on investment without much risk.
Risk reduction: The risks of both financial services and producers are reduced as a result of the presence of insurance companies. They cover a variety of risks, not only to protect them from changing business conditions, but also from the risks of natural disasters.
Maximizing profits: The presence of these services allows employers to maximize profits. This is possible because the credit is at a reasonable rate. Producers can use a variety of credit facilities to acquire assets. In some cases, they may even resort to renting out valuable assets.
Benefit for the government: The presence of these services allows the government to raise both short-term and long-term funds to meet revenue and capital expenditures. Through the money market, the government raises short-term funds through the Treasury Bill. These are bought by commercial banks from deposit money.
Capital Market: One of the barometers of any economy is the presence of a vibrant capital market. If there is intense activity in the capital market, it is an indicator of the presence of a positive economic situation. These services ensure that all companies have access to the right funds to promote production and ultimately achieve higher profits.