Financial services refer to services A service is the intangible equivalent of a good. Service provision is often an economic activity where the buyer does not generally, except by exclusive contract, obtain exclusive ownership of the thing purchased. The benefits of such a service, if priced, are held to be self-evident in the buyers willingness to pay for it. Public services are 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 Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global bank capital standards are called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries, credit card A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer from which the user can borrow money for payment to a merchant or as a cash advance to the companies, insurance In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured or policyholder is the person or companies, consumer finance Consumer finance in the most basic sense of the word refers to any kind of lending to consumers. However, in the United States financial services industry, the term "consumer finance" often refers to a particular type of business, sub prime branch lending . This branch of the financial services industry is more extensive in the United companies, stock brokerages A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors. A broker may be employed by a brokerage firm, investment funds Investment management is the professional management of various securities and assets (e.g., real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via and some government sponsored enterprises The government-sponsored enterprises are a group of financial services corporations created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent. The desired effect of the GSEs is to enhance the availability. As of 2004, the financial services industry represented 20% of the market capitalization Market capitalization/capitalisation is a measurement of size of a business enterprise (corporation) equal to the share price times the number of shares outstanding of a public company. As owning stock represents ownership of the company, including all its equity, capitalization could represent the public opinion of a company's net worth and is a of the S&P 500 The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock market companies; the NYSE Euronext and the in the United States ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language.^[1]

History of financial services

In the United States

The term "financial services" became more prevalent in the United States ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language partly as a result of the Gramm-Leach-Bliley Act The Gramm-Leach-Bliley Act , also known as the Financial Services Modernization Act of 1999, (Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999-2001) signed into law by President William J. Clinton which repealed part of the Glass-Steagall Act of 1933, opening up the market among banking of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge.^{[citation needed]} Companies usually have two distinct approaches to this new type of business. One approach would be a bank which simply buys an insurance company or an investment bank An investment bank is a financial institution that assists corporations and governments in raising capital by underwriting and acting as the agent in the issuance of securities. An investment bank also assists companies involved in mergers and acquisitions, derivatives, etc. Further it provides ancillary services such as market making and the, keeps the original brands A brand is the identity of a specific product, service, or business[page needed]. A brand can take many forms, including a name, sign, symbol, color combination or slogan. The word brand began simply as a way to tell one person's cattle from another by means of a hot iron stamp. A legally protected brand name is called a trademark. The word brand of the acquired firm, and adds the acquisition In business, a takeover is the purchase of one company by another (the acquirer, or bidder). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company to its holding company simply to diversify its earnings Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings received... in a given period of time.". Outside the U.S. (e.g., in Japan Japan is an island country in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south. The characters that make up Japan's name mean "sun-origin", which is why Japan is), non-financial services companies are permitted within the holding company A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself, rather its only purpose is owning shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of. In this scenario, each company still looks independent, and has its own customers, etc. In the other style, a bank would simply create its own brokerage division or insurance division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company.

Banks

A "commercial bank A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits. After the implementation of the Glass-Steagall Act, the U.S. Congress required that banks engage" is what is commonly referred to as simply a "bank". The term "commercial Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer OR commerce is the exchange of goods and services from the point of production to the point of consumption to satisfy human wants. It comprises the trading of something of economic value such as goods, services," is used to distinguish it from an "investment bank An investment bank is a financial institution that assists corporations and governments in raising capital by underwriting and acting as the agent in the issuance of securities. An investment bank also assists companies involved in mergers and acquisitions, derivatives, etc. Further it provides ancillary services such as market making and the", a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals (debt) or stock The stock or capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors. Stock is distinct from the property and the assets of a business which may fluctuate in (equity).

Banking services

The primary operations of banks include:

• Keeping money safe A safe is a secure lockable box used for securing valuable objects against theft or damage. A safe is usually a hollow cuboid or cylinder, with one face removable or hinged to form a door. The body and door may be cast from metal (such as steel) or formed out of plastic through blow molding while also allowing withdrawals Withdrawal can refer to any sort of separation, but is most commonly used to describe the group of symptoms that occurs upon the abrupt discontinuation/separation or a decrease in dosage of the intake of medications, recreational drugs, and/or alcohol. In order to experience the symptoms of withdrawal, one must have first developed a physical when needed
• Issuance of checkbooks A cheque or check is a piece of paper (usually) that orders a payment of money. The person writing the cheque, the drawer, usually has a chequing account where their money is deposited. The drawer writes the various details including the money amount, date, and a payee on the cheque, and signs it, ordering their bank, know as the drawee, to pay so that bills can be paid and other kinds of payments can be delivered by post
• Provide personal loans An unsecured loan is a loan that is not backed by collateral. Also known as a signature loan or personal loan, commercial loans A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower, and mortgage loans A mortgage loan is a loan secured by real property through the use of a document which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan (typically loans to purchase a home, property or business)
• Issuance of credit cards A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer from which the user can borrow money for payment to a merchant or as a cash advance to the and processing of credit card transactions and billing
• Issuance of debit cards A debit card is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so for use as a substitute for checks
• Allow financial transactions at branches or by using Automatic Teller Machines An automated teller machine or automatic banking machine (ABM) is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic (ATMs)
• Provide wire transfers of funds and Electronic fund transfers Electronic funds transfer or EFT refers to the computer-based systems used to perform financial transactions electronically between banks
• Facilitation of standing orders and direct debits Debit credit are formal bookkeeping and accounting terms. They are the most fundamental concepts in accounting, representing the two sides of each individual transaction recorded in any accounting system. A debit indicates an asset or an expense transaction, a credit indicates a transaction that will cause a liability or a gain. A debit, so payments for bills can be made automatically
• Provide overdraft An overdraft occurs when withdrawals from a bank account exceed the available balance. In this situation a person is said to be "overdrawn" agreements for the temporary advancement of the Bank's own money to meet monthly spending commitments of a customer in their current account.
• 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 cashier's check A cashier's check is a check guaranteed by a bank. They are usually treated as cash since most banks clear them instantly. However, banks are permitted to take back money from a "cleared" check one or two weeks later if subsequent processing finds it to be fraudulent. Because customers believe the checks have been found valid and have or certified check A certified check or certified cheque is a form of check for which the bank verifies that sufficient funds exist in the account to cover the check, and so certifies, at the time the check is written. Those funds are then set aside in the bank's internal account until the check is cashed or returned by the payee. Thus, a certified check cannot &.
• Notary Most common law systems have what is called in the United States a notary public, a public official who notarizes legal documents and who can also administer and take oaths and affirmations, among other tasks. In the United States, a Signing agent, also known as a Loan Signing Agent, is a Notary Public who specializes in notarizing mortgage/real service for financial and other documents

Other types of bank services

• Private banking Private banking is a term for banking, investment and other financial services provided by banks to private individuals investing sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers. It should not be confused with - Private banks provide banking services exclusively to high net worth individuals A high net worth individual is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets (financial assets not including primary residence) in excess of US$1 million. As explained below, the U.S. Securities and Exchange Commission has promulgated a different definition of &. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking services.^[2] Private banks often provide more personal services, such as wealth management and tax planning, than normal retail banks.^[3]
• Capital market bank - bank that underwrite Underwriting refers to the process that a large financial service provider uses to assess the eligibility of a customer to receive their products (equity capital, insurance, mortgage, or credit). The name derives from the Lloyd's of London insurance market. Financial bankers, who would accept some of the risk on a given venture (historically a sea debt and equity The stock or capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors. Stock is distinct from the property and the assets of a business which may fluctuate in, assist company deals (advisory services, underwriting and advisory fees), and restructure debt into structured finance Structured finance is a broad term used to describe a sector of finance that was created to help transfer risk using complex legal and corporate entities. This risk transfer as applied to securitization of various financial assets has helped to open up new sources of financing to consumers. However, it arguably contributed to the degradation in products.
• Bank cards - include both credit cards A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer from which the user can borrow money for payment to a merchant or as a cash advance to the and debit cards A debit card is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card. In some cases, the cards are designed exclusively for use on the Internet, and so. Bank Of America is the largest issuer of bank cards.^{[citation needed]}
• Credit card machine services and networks - Companies which provide credit card machine and payment networks call themselves "merchant card providers".

Foreign exchange services

Foreign exchange services are provided by many banks around the world. Foreign exchange services include:

• Currency Exchange - where clients can purchase and sell foreign currency banknotes.
• Wire transfer Banks collect payment for the service from the sender as well as from the recipient. The sending bank typically collects a fee separate from the funds being transferred, while the receiving bank and intermediate banks through which the transfer travels deduct fees from the money being transferred so that the recipient receives less than when the - where clients can send funds to international banks abroad.
• Foreign Currency Banking - banking transactions are done in foreign currency.

Investment services

• Asset management Investment management is the professional management of various securities and assets (e.g., real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via - the term usually given to describe companies which run collective investment funds A collective investment scheme is a way of investing money with others to participate in a wider range of investments than feasible for most individual investors, and to share the costs and benefits of doing so.
• Hedge fund management - Hedge funds often employ the services of "prime brokerage" divisions at major investment banks to execute their trades.
• Custody services - the safe-keeping and processing of the world's securities trades and servicing the associated portfolios. Assets under custody in the world are approximately $100 trillion.^[4]

Insurance

• Insurance brokerage - Insurance brokers shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently a number of websites have been created to give consumers basic price comparisons for services such as insurance, causing controversy within the industry.^[5]
• Insurance underwriting - Personal lines insurance underwriters 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 & casualty insurance.
• Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.

Other financial services

• Intermediation or advisory services - These services involve stock brokers (private client services) and discount brokers. Stock brokers assist investors in buying or selling shares. Primarily internet-based companies are often referred to as discount brokerages, although many now have branch offices to assist clients. These brokerages primarily target individual investors. Full service and private client firms primarily assist and execute trades for clients with large amounts of capital to invest, such as large companies, wealthy individuals, and investment management funds.
• Private equity - 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
• Venture capital is a type of private equity capital typically provided by professional, outside investors to new, high-potential-growth companies in the interest of taking the company to an IPO or trade sale of the business.
• Angel investment - An angel investor or angel (known as a business angel or informal investor in Europe), is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.
• Conglomerates - A financial services conglomerate is a financial services firm 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 i.e. bad things don't always happen at the same time. As a consequence, economic capital for a conglomerate is usually substantially less than economic capital is for the sum of its parts.

Financial crime

UK

Fraud within the financial industry costs the UK an estimated £14bn a year and it is believed a further £25bn is laundered by British institutions.^[6]

Market share

The financial services industry constitutes the largest group of companies in the world in terms of earnings and equity market cap. However it is not the largest category in terms of revenue or number of employees. It is also a slow growing and extremely fragmented industry, with the largest company (Citigroup), only having a 3 % US market share.^[7] In contrast, the largest home improvement store in the US, Home Depot, has a 30 % market share, and the largest coffee house Starbucks has a 32 % market share.

See also

• Accounting scandals
• BFSI
• European Financial Services Roundtable
• Financial analyst
• Financial data vendors
• Financial markets
• Financialization
• Financial transaction tax
• Government sponsored enterprise
• Institutional customers
• International Monetary Fund
• Investment management
• List of banks
• List of investment banks
• Misleading financial analysis
• Thomson Financial League Tables

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