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Financial services

Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.

For the Hong Kong constituency, see Financial Services (constituency).

The finance industry in its most common sense concerns commercial banks that provide market liquidity, risk instruments, and brokerage for large public companies and multinational corporations at a macroeconomic scale that impacts domestic politics and foreign relations. The extragovernmental clout and scale of the finance industry remains an ongoing controversy in many industrialized Western economies, as seen in the American Occupy Wall Street civil protest movement of 2011.


Styles of financial institution include credit union, bank, savings and loan association, trust company, building society, brokerage firm, payment processor, many types of broker, and some government-sponsored enterprise.[1]


Financial services include accountancy, investment banking, investment management, and personal asset management.


Financial products include insurance, credit cards, mortgage loans, and pension funds.

Relationship to the government[edit]

The financial sector is traditionally among those to receive government support in times of widespread economic crisis. Such bailouts, however, enjoy less public support than those for other industries.[4]

Keeping money while also allowing withdrawals when needed

safe

Issuance of so that bills can be paid and other kinds of payments can be delivered by the post

chequebooks

Provide , commercial loans, and mortgage loans (typically loans to purchase a home, property or business)

personal loans

Issuance of , processing of credit card transactions and billing

credit cards

Issuance of for use as a substitute for cheques

debit cards

Allow financial transactions at branches or by using (ATMs)

automatic teller machines

Provide wire transfers of funds and between banks

electronic fund transfers

Facilitation of standing orders and direct , so payments for bills can be made automatically

debits

Provide agreements for the temporary advancement of the bank's own money to meet the monthly spending commitments of a customer in their current account.

overdraft

Provide system to facilitate customers to view and operate their respective accounts through the internet.

internet banking

Provide charge card advances of the bank's own money for customers wishing to settle credit advances monthly.

Provide a check guaranteed by the bank itself and prepaid by the customer, such as a or certified check.

cashier's check

service for financial and other documents

Notary

Accepting deposits from customers and providing credit facilities to them.

Sell investment products like mutual funds Etc.

– where clients can purchase and sell foreign currency banknotes.

Currency exchange

– where clients can send funds to international banks abroad.

Wire transfer

– where clients that are migrant workers send money back to their home country.

Remittance

FX or Foreign exchange services are provided by many banks and specialists foreign exchange brokers around the world. Foreign exchange services include:


London handled 36.7% of global currency transactions in 2009 – an average daily turnover of US$1.85 trillion – with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined.[5][6][7][8][9]

– A fund that acts as an investment pool so investors can put money into a fund that will reinvest it into a variety of securities based upon their common, outlined investment goal.

Collective investment fund

Investment Advisory Offices – Run by registered investment advisors who advise clients in financial planning and invest their money.

– Hedge funds often employ the services of "prime brokerage" divisions at major investment banks to execute their trades.

Hedge fund management

– Private equity funds are typically closed-end funds, which usually take controlling equity stakes in businesses that are either private or taken private once acquired. Private equity funds often use leveraged buyouts (LBOs) to acquire the firms in which they invest. The most successful private equity funds can generate returns significantly higher than provided by the equity markets.

Private equity

– Private equity capital typically provided by professional, outside investors to new, high-growth-potential companies in the interest of taking the company to an IPO or trade sale of the business. Startup companies are typically fueled by an angel investor.

Venture capital

– Investment and wealth management firm that handles a wealthy family or small group of wealthy individuals with financial plans tailored to their needs. Similar to private banking.

Family office

Advisory services – These firms (or departments within a larger entity) service clients with who serve as both, a broker as well as a financial consultant.

financial advisers

– the safe-keeping and processing of the world's securities trades and servicing the associated portfolios. Assets under custody in the world are approximately US$100 trillion.[10]

Custody services

New York City is the largest center of investment services, followed by London.[11]

Insurance brokerage – shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently several websites have been created to give consumers basic price comparisons for services such as insurance, causing controversy within the industry.[12]

Insurance brokers

Insurance underwriting – Personal lines insurance actually underwrite insurance for individuals, a service still offered primarily through agents, insurance brokers, and stock brokers. Underwriters may also offer similar commercial lines of coverage for businesses. Activities include insurance and annuities, life insurance, retirement insurance, health insurance, and property insurance and casualty insurance.

underwriters

Finance and insurance – a service still offered primarily at asset dealerships. The F&I manager encompasses the financing and insuring of the asset which is sold by the dealer. F&I is often called "the second gross" in dealerships that have adopted the model

– Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.

Reinsurance

The United States, followed by Japan and the United Kingdom are the largest insurance markets in the world.[13]

Angel investment networks – A group of can create their own network to be the financial foundation for future companies.

angel investors

Credit card networking – Companies that serve as the bridge between the retailers and the banks who issue the bank cards. Major credit card networks are: , Mastercard, Visa Inc., Rupay, American Express and Discover Financial.

UnionPay

– A financial services company, such as a universal bank, that is active in more than one sector of the financial services market e.g. life insurance, general insurance, health insurance, asset management, retail banking, wholesale banking, investment banking, etc. A key rationale for the existence of such businesses is the existence of diversification benefits that are present when different types of businesses are aggregated. As a consequence, economic capital for a conglomerate is usually substantially less than economic capital is for the sum of its parts.

Conglomerates

– A consumer service that assists individuals that have too much debt to pay off as requested, but do not want to file bankruptcy and wish to pay off their debts owed. This debt can be accrued in various ways including but not limited to personal loans, credit cards, or in some cases merchant accounts.

Debt resolution

Financial market utilities – Organizations that are part of the infrastructure of financial services, such as , clearing houses, derivative and commodity exchanges and payment systems such as real-time gross settlement systems or interbank networks.

stock exchanges

Payment recovery – Assistance in recovering money inadvertently paid to vendors by businesses, such as by accidental duplicate payment of an invoice or failure to return a deposit.

Financial exports[edit]

A financial export is a financial service provided by a domestic firm (regardless of ownership) to a foreign firm or individual. While financial services such as banking, insurance, and investment management are often seen as domestic services, an increasing proportion of financial services are now being handled abroad, in other financial centres, for a variety of reasons. Some smaller financial centres, such as Bermuda, Luxembourg, and the Cayman Islands, lack sufficient size for a domestic financial services sector and have developed a role providing services to non-residents as offshore financial centres. The increasing competitiveness of financial services has meant that some countries, such as Japan, which were once self-sufficient, have increasingly imported financial services.


The leading financial exporter, in terms of exports less imports, is the United Kingdom, which had $95 billion of financial exports in 2014.[14] The UK's position is helped by both unique institutions (such as Lloyd's of London for insurance, the Baltic Exchange for shipping etc.)[15] and an environment that attracts foreign firms;[16] many international corporations have global or regional headquarters in the London and are listed on the London Stock Exchange, and many banks and other financial institutions operate there or in Edinburgh.[17][18]

Porteous, Bruce T.; Pradip Tapadar (December 2005). Economic Capital and Financial Risk Management for Financial Services Firms and Conglomerates. Palgrave Macmillan.  1-4039-3608-0.

ISBN

The role of the Financial Services Sector in Expanding Economic Opportunity | A report by Christopher N. Sutton and Beth Jenkins | John F. Kennedy School of Government | Harvard University