INTRODUCTIONFinancial services refer to services provided by the finance industry.The finance industry encompasses a broad range of organizationsthat deal with the management of money. Among theseorganizations are credit unions, banks, credit cardcompanies, insurance companies, consumerfinance companies, stock brokerages, investment funds andsome government sponsored enterprises. As of 2004, the financialservices industry represented 20% of the market capitalization of this500 in the United States.Financial services refer to services provided by the finance industry.The finance industry encompasses a broad range of organizationsthat deal with the management of money. Among theseorganizations are banks, credit card companies, insurancecompanies, consumer finance companies, stockbrokerages, investment funds and some government sponsoredenterprises.
HISTORY OF FINANCIAL SERVICESThe term "financial services" became more prevalent in the UnitedStates partly as a result of the Gramm-Leach-Bliley Act of the late1990s, which enabled different types of companies operating in theU.S. financial services industry at that time to merge.Companies usually have two distinct approaches to this new type ofbusiness. One approach would be a bank which simply buys aninsurance company or an investment bank, keeps theoriginal brands of the acquired firm, and adds the acquisition to itsholding company simply to diversify its earnings. Outside the U.S.(e.g., in Japan), non-financial services companies are permittedwithin the holding company. In this scenario, each company stilllooks independent, and has its own customers, etc.In the other style, a bank would simply create its own brokeragedivision or insurance division and attempt to sell those products to itsown existing customers, with incentives for combining all things withone company...
SCENARIO PRIOR TO LIBERALIZATION • Excessive Control In The Form Of Regulation. • Lack of information about International Developments. • Control over the prices of Securities. • Non availability of Financial Instruments. • Strict Regulations of the Foreign Exchange Market.
MARKET SHARE OF FINANCIAL SERVICESThe financial services industry constitutes the largestgroup of companies in the world in terms of earningsand equity market capitalization. However it is notthe largest category in terms of revenue or number ofemployees. It is also a slow growing and extremelyfragmented industry, with the largest company(Citigroup), only having a 3 % US market share. Incontrast, the largest home improvement store in theUS, Home Depot, has a 30 % market share, and thelargest coffee house Starbucks has a 32% marketshare
MEANING OF FINANCIAL SERVICES Typically, it means “mobilizing and allocating SAVINGS”. It includes all activities involved in the transformation of SAVINGS into INVESTMENTS. Financial Services can also be called “Financial Intermediation”.
IMPORTANCE OF FINANCIAL SERVICES • Economic • Promotion Growth of Savings Financial Contribution to Intermediation GNP Creation of Dominance of employment Human element opportunities • Capital • Provision of formation Liquidity
CLASSIFICATION OF FINANCIAL SERVICES-C-1 Traditional and Modern C-2 Formal and InformalC-3 Fund-based and Fee-based
TYPES OF FINANCIAL SERVICES ForeignBanking Investment exchange Insuranceservices services services AssetIssuance of Currency Insurance managemecheckbooks Exchange brokerage nt Provide Foreign Hedge fund personal Currency manageme Reinsuranceloans, com Banking nt mercial loans Wire transfer ATMs
BANKING Design/Development of Online Consumer Banking Portal supporting multiple languages & time zonesRetail, Wholesale, Com Design/Development of common customer mercial information structure to enable cross-selling and between Mortgage and Savings Bank customers Mortgage Lead generation and credit checking system for wholesale banking customers.
CAPITAL MARKETS Front-end Design/Development of fixed income Trading derivatives trading application. Platform, Risk Management, Compliance Management, Design/Development of portfolio risk data Order mart.Management, Fund Accounting Functional and regression testing for a foreign exchange derivatives trading system.
CREDIT SERVICES Design/Development of compliance Risk management system for credit derivatives.Management,ComplianceManagement, Credit Application Interfacing of a home grown pricing engine a credit management package.
TRANSACTION SERVICES Design/Development of a funds transfer system Equity/Fixed compliant with Single Euro Payment Area Income Back- (SEPA). endProcessing, Fun dsTransfer, Compli Design/Development of a prototype system ance providing Straight Thru Processing
MUTUAL / HEDGE FUNDS Design/development of a comprehensive data warehouse to track customer profiles and funds profile for a leading mutual fund company. Portfolio/ Customer/ Design/development of a comprehensiveCompliance data warehouse to track customer profiles and funds profile for a leading mutual fundmanagement company.and reporting Design/development of a test harness and execution of functional and load tests for online mutual fund portal using Mercury Interactive QA tools.
INSURANCE Design/Development of online quote/binding system for auto insurance.Life, Auto,Property & Casualty, Healthcare comparison shopping online Health portal. Comprehensive data warehouse for compliance reporting for a Life Insurance Company.
FINANCIAL SERVICES MODERNIZATION ACT (1999)• Transformed the banking industry.• Eliminated many restrictions among companies in the- Securities banking, and Insurance industries.
FINANCIAL SERVICES AND PROMOTION OF INDUSTRIES• Industrial promotion through Merchant Banking Services• Working Capital Finance Through Factoring Services• Equipment Finance through Leasing• Financial resources through Mutual Funds• Long-term Risk Capital through Venture Capital• Risk Management through Derivatives• Debenture issue through Credit rating• Development Finance through Development Banking Sector• Industrial Development through Specialized Services
FINANCIAL SERVICE COMPANIESFinancial services companies thrive on quick, butaccurate decisions with equally agile competitorsfighting for every transaction within the constantlychanging regulatory framework, which is different inevery country. Keeping up with the fast-changingrequirements for quick decision making, operationalefficiency, accurate accounting and regulatorycompliance makes the business processes andhence the IT systems very complex and dynamic.
FINANCIAL SERVICES INDUSTRYThe financial services industry relies heavily on itsinformation systems and technologies, thuscontinuously investing in acquiring, upgrading andmaintaining systems, data and infrastructure.Robust, responsive, secure, high quality, reliable andaccurate infrastructure and software backboneis absolutely essential to survive and thrive in thiscompetitive industry
WHAT IS THE FINANCIAL SERVICES INDUSTRY: There is a potential source of confusion regarding careers in finance. On the one hand, there is a function called finance that is common to all business enterprises, in every industry. On the other hand, there is a financial services industry. The primary focus of this guide site is on the latter definition. Additionally, note that the finance function is but one of many possible career paths within the financial services industry. The financial services industry includes firms that are engaged in activities such as investing, lending, insurance, securities trading and securities issuance. This is not an exhaustive list, but these companies can be characterized as being in one or more of the following lines of business: Example- Banking, Insurance, Securities Brokerage (or Financial Advisory Services),Investment Banking, Securities Trading, Investment Management (or MoneyManagement), Securities Analysis, Financial Planning, Wall Street