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Financial services
Financial services
are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.[1] Financial services
Financial services
companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City, and Tokyo.

Contents

1 History 2 Banks

2.1 Commercial banking services 2.2 Investment banking services

3 Foreign exchange services 4 Investment services 5 Insurance 6 Other financial services 7 Financial exports 8 See also 9 References 10 Further reading 11 External links

History[edit] See also: Global financial system § History of international financial architecture The term "financial services" became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge.[2] 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, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings. Outside the U.S. (e.g. Japan), non-financial services companies are permitted within the holding company. 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[edit] Main article: Bank Commercial banking services[edit] Main article: Commercial bank A commercial bank is what is commonly referred to as simply a bank. The term "commercial" is used to distinguish it from an investment bank, 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 (debt) or stock (equity). The primary operations of commercial banks include:

Keeping money safe while also allowing withdrawals when needed Issuance of chequebooks so that bills can be paid and other kinds of payments can be delivered by the post Provide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home, property or business) Issuance of credit cards and processing of credit card transactions and billing Issuance of debit cards for use as a substitute for cheques Allow financial transactions at branches or by using Automatic Teller Machines (ATMs) Provide wire transfers of funds and Electronic fund transfers between banks Facilitation of standing orders and direct debits, so payments for bills can be made automatically Provide overdraft agreements for the temporary advancement of the bank's own money to meet monthly spending commitments of a customer in their current account. Provide internet banking system to facilitate the customers to view and operate their respective accounts through internet. 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 or certified check. Notary
Notary
service for financial and other documents Accepting the deposits from customer and provide the credit facilities to them. Sell investment products like mutual funds Etc.

The United States
United States
is the largest location for commercial banking services. Investment banking services[edit] Main article: Investment banking

Capital markets
Capital markets
services - underwriting debt and equity, assist company deals (advisory services, underwriting, mergers and acquisitions and advisory fees), and restructure debt into structured finance products. Brokerage services - facilitating the buying and selling of financial securities between a buyer and a seller. In today's (2014) stock brokers, brokerages services are offered online to self trading investors throughout the world who have the option of trading with 'tied' online trading platforms offered by a banking institution or with online trading platforms sometimes offered in a group by so-called online trading portals. Private banking - Private banks provide banking services exclusively to high-net-worth individuals. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking service.[3] Private banks often provide more personal services, such as wealth management and tax planning, than normal retail banks.[4]

New York City and London
London
are the largest centers of investment banking services. NYC is dominated by U.S. domestic business, while in London international business and commerce make up a significant portion of investment banking activity.[5] Foreign exchange services[edit] Foreign exchange services are provided by many banks and specialist foreign exchange brokers around the world. Foreign exchange services include:

Currency exchange - where clients can purchase and sell foreign currency banknotes. Wire transfer - where clients can send funds to international banks abroad. Remittance
Remittance
- where clients that are migrant workers send money back to their home country.

London
London
handled 36.7% of global currency transactions in 2009[update] – an average daily turnover of US$1.85 trillion – with more US dollars traded in London
London
than New York, and more Euros
Euros
traded than in every other city in Europe combined.[6][7][8][9][10] Investment services[edit]

Investment management - the term usually given to describe companies which run collective investment funds. Also refers to services provided by others, generally registered with the Securities and Exchange Commission as Registered Investment Advisors. Investment banking financial services focus on creating capital through client investments. Hedge fund
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 US$100 trillion.[11]

New York City is the largest center of investment services, followed by London.[12] Insurance[edit] Main article: Insurance

Insurance
Insurance
brokerage - Insurance
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.[13] Insurance
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 insurance and casualty insurance. Finance
Finance
& Insurance
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 who have adopted the model Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.

The United States, followed by Japan
Japan
and the United Kingdom
United Kingdom
are the largest insurance markets in the world.[14] Other financial services[edit]

Bank
Bank
cards - include both credit cards and debit cards. According to the Nilson Report, JP Morgan Chase is the largest issuer of bank cards.[15] Credit card
Credit card
machine services and networks - Companies which provide credit card machine and payment networks call themselves "merchant card providers". Intermediation or advisory services - These services involve stock brokers (private client services) and discount brokers. Stock
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
- 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
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
Venture capital
is a type of 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. 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 resources and pool their investment capital. Conglomerates - 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 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 market
Financial market
utilities - Organisations that are part of the infrastructure of financial services, such as stock exchanges, clearing houses, derivative and commodity exchanges and payment systems such as real-time gross settlement systems or interbank networks. Debt resolution is 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.

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 a domestic service, 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 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.[16] The UK's position is helped by both unique institutions (such as Lloyd's of London
Lloyd's of London
for insurance, the Baltic Exchange
Baltic Exchange
for shipping etc.)[17] and an environment that attracts foreign firms;[18] many international corporations have global or regional headquarters in the London
London
and are listed on the London
London
Stock
Stock
Exchange, and many banks and other financial institutions operate there or in Edinburgh.[19][20] See also[edit]

Book: Finance

Alternative financial services Financial analyst Financial crime Financial data vendors Financial markets Financial technology Financialization Insider threat International Monetary Fund List of banks List of investment banks List of largest financial services companies by revenue

References[edit]

^ "Financial Services: Getting the Goods". IMF. 28 March 2012. Retrieved 8 September 2015.  ^ "Bill Summary & Status 106th Congress (1999 - 2000) S.900 CRS Summary - Thomas (Library of Congress)". Retrieved 2011-02-08.  ^ "Private Banking definition". Investor Words.com. Retrieved 2009-02-06.  ^ "How Swiss Bank
Bank
Accounts Work". How Stuff Works. Retrieved 2009-02-06.  ^ Roberts, Richard (2008). The City: A Guide to London's Global Financial Centre. Economist. p. 2.  ^ "Research and statistics FAQ". The City of London. Archived from the original on 26 September 2011. Retrieved 23 February 2012.  ^ "Triennial Central Bank
Bank
Survey - Foreign exchange and derivatives market activity in 2004" (PDF). Bank
Bank
for International Settlements. March 2005. Retrieved 2018-03-05.  ^ "Key facts Archived 4 June 2012 at Archive.is", Corporation of London. Retrieved 19 June 2006. ^ European Central Bank
Bank
(July 2017) "The international role of the euro". European Central Bank. p. 28. ^ Chatsworth Communications (April 6, 2016) "London's leading position as a USD 2.2 trillion hub for FX trading would be harmed by a Brexit, according to poll of currency market professionals". Chatsworth Communications. ^ "Prudential: Securities Processing Primer" (PDF). cm1.prusec.com.  ^ "Asset Management in the UK 2016-2017" (PDF). The Investment Management Association. September 2017. p. 12. Retrieved 5 March 2018.  ^ "Price comparison sites face probe". BBC News. 2008-01-22. Retrieved 2009-02-06.  ^ "UK Insurance
Insurance
& Long Term Savings Key Facts 2015" (PDF). Association of British Insurers. September 2015. Retrieved 5 March 2018.  ^ "The Nilson Report - News and Statistics for Card and Mobile Payment Executives".  ^ "UK trade surplus in financial services highest ever". TheCityUK. 21 July 2015. Retrieved 5 June 2015.  ^ Clark, David (2003). Urban world/global city. Routledge. pp. 174–176. ISBN 0415320976 ; Shubik, Martin (1999). The theory of money and financial institutions. MIT Press. p. 8. ISBN 0262693119.  ^ Roberts, Richard (2008). The City: A Guide to London's Global Financial Centre. Economist. pp. 1–22.  ^ "UK's financial services trade surplus biggest in the world, dwarfing its nearest rivals". TheCityUK. 3 July 2014. Retrieved 5 June 2015.  ^ " Special
Special
report on services exports" (PDF). EY Item Club. June 2014. Retrieved 8 September 2015. 

Further reading[edit]

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

External links[edit]

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

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