Management Financial

Services
Financial services- an Overview
 Concept
• Financial services can be defined as the products and services
offered by institutions 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

• 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.
 Functions
• Facilitating transactions (exchange of goods and
services) in the economy.
• Mobilizing savings (for which the outlets would otherwise
be much more limited).
• Allocating capital funds (notably to finance productive
investment).
• Monitoring managers (so that the funds allocated will be
spent as envisaged).
• Transforming risk (reducing it through aggregation and
enabling it to be carried by those more willing to bear it).
 Characteristics
• Intangibility
• Customer orientation
• Inseparability
• Perishability
• Dynamism
 Constituents
• Market Players:- banks, financial institutions, mutual
funds, merchant bankers, stock brokers
• Instruments:- equity instruments, debt instruments,
hybrids, bonds
• Specialised Institutions:- credit ratings agencies, venture
capital institutions
• Regulatory bodies:- rbi, sebi, board for industrial and
financial reconstruction, dept. of banking and insurance
of central govt.
 Types
Banking Foreign
Exchange
Service Service Investment
Insurance
Issues of Service
Currency
checkbo change
oks Asset Insurance
mgt brokerage
Foreign
ATMs currency
banks
Hedge reinsurance
Commercial
fund mgt
loans,perso
Wire
nal loans transfer
 Types
• FUND BASED SERVICES
• FEE BASED SERVICES
 FUND BASED SERVICE
• Firm raises funds through debt, equity,
deposits, and the bank invests the funds in
securities or lends to those who are in
need of capital
• Leasing and hiring, housing finance, credit
cards, venture capital, factoring, forfeiting,
insurance, bill discounting
 FEE BASED SERVICES
• The services wherein financial institutions
operate in specialised fields to earn a
substantial income in the form of fees or
dividends or brokerage on operations
• Issue mgt, corporate advisory service,
credit rating, mutual funds, asset
securitization, stock broking service
 Problems
• Lack of expertise
• Inadequate Accommodation
• Inadequate Technology
• Inadequate Quality Service
• Limited Innovations
• Restrictive scope of operations