- Posted by: Jackee Lu
- Category: Articles
We get to hear a lot of terms in today’s markets that sound simple and complex at the same time Financial Services. When it comes to understanding what they mean and how they are useful for the common public, we tend to rely on what others tell us or search for information on the internet. But it is not always that we understand what the terms actually mean. While it may not be an issue in all instances, it pays to be aware of what at least some of them are, especially in the financial world.
This blog is dedicated to knowing what financial services are and how banks and financial institutions provide these services to individuals and businesses.
In simple terms, financial services are provided by the financial industry which consists of various organizations such as banks, insurance companies, investment companies and agents, private money lending institutions, credit card companies, and government-sponsored agencies.
Creating bank accounts, providing credits and loans, helping in creating an investment portfolio, retirement planning services, mortgage brokerage, insurance investments, etc, are some of the financial services provided by the above-mentioned institutions and agencies.
Characteristics of Financial Services
- Intangible Services
- Financial services are intangible, meaning that they do not have a physical or tangible presence, though the instruments (money, checks, documents, etc.) used are tangible. It is necessary for financial institutions to build trust among their clients by providing quality services.
- Perishing Services
- And since they are intangible, financial services cannot be stored. They can only be supplied based on the requirements of the clients. The services are customized for each client within the limitations of the law.
- Dynamic Services
- As market trends and laws change, financial services change and redefine themselves based on the socio-economic conditions of the country and the region. Standard of living, disposable income, education, etc are some factors that affect financial services.
- Inseparable Services
- Financial services and instruments cannot be separated. They do not exist without each other. The services are provided for the instruments and vice versa.
Importance of Financial Services
We cannot deny the importance of financial services in this world. From keeping the markets alive to promoting savings and investments, financial services play a crucial role in building an economically strong nation.
- Financial services strive to ensure the following-
- Creating and maintaining a vibrant capital market for investors.
- Helping in expanding the activities of financial markets.
- Maximizing the returns for investors while trying to minimize the risks involved with the investments.
- Promoting various investments and saving options (long-term and short-term, equity, debt, and mutual funds).
- Helping in balancing the regional development of a country. Individual focus on each region/ state.
- Boosting economic growth and development of the country.
Innovation, creativity, the ability to predict future financial trends, offering wise investment suggestions, etc. are some of the ways in which financial institutions can gain the trust of their clients and create a dynamic economy for the country.