International Institute Of

Professional Studies
MBA-MS-5 Years-7th Sem

FINANCIAL
SERVICES

INTRODUCTION
Financial servicesrefer toservicesprovided by the finance industry.
The finance industry encompasses a broad range of organizations
that deal with the management of money. Among these organizations
arecredit unions,banks,credit card companies,insurance
companies,consumer financecompanies,stock brokerages,
investment fundsand somegovernment sponsored enterprises . As of
2004, the financial services industry represented 20% of the
market capitalizationof this 500in theUnited States.[1]
Financial services refer to services 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, credit card companies, insurance companies, consumer
finance companies, stock brokerages, investment funds and some
government sponsored enterprises.

HISTORY OF FINANCIAL SERVICES

The term "financial services" became more prevalent in the
United Statespartly as a result of theGramm-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 aninvestment bank, keeps the originalbrands
of the acquired firm, and adds theacquisitionto its holding company
simply to diversify itsearnings. Outside the U.S. (e.g., inJapan), nonfinancial 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...

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 SERVICES

The financial services industry constitutes the
largest group of companies in the world in terms of
earnings and equity market capitalization. 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.[8]In contrast, the largest home
improvement store in the US,Home Depot, has a
30% market share, and the largest coffee house
Starbuckshas a 32% market share

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.

FEATURES OF FINANCIAL SERVICES

Customer Oriented

Intangibility

Perishability
Simultaneous
Performance

Dominance Of
Human Elements

IMPORTANCE OF FINANCIAL SERVICES

Economic
Growth

Capital
formation

Promotion of
Savings

Financial
Intermediation

Contribution to
GNP

Creation of
employment
opportunities

Dominance of
Human element

Provision of
Liquidity

CLASSIFICATION OF FINANCIAL
SERVICES-

C-1

C-2

C-3

Traditional and Modern

Formal and Informal
Fund-based and Fee-based

TYPES OF FINANCIAL SERVICES

Banking
services

Foreign
exchange
services

Investment
services

Insurance

Issuance of
checkbooks

Currency
Exchange

Asset
manageme
nt

Insurance
brokerage

Provide
personal
loans,
commercial
loans

Foreign
Currency
Banking

Hedge fund
manageme
nt

Reinsurance

Wire
transfer
ATMs

MODERN FINANCIAL SERVICES

MAJOR FINANCIAL SERVICES

BANKING

Design/Development of Online Consumer

Banking Portal supporting multiple languages &
time zones

Retail,
Wholesal
Design/Development of common customer
e,
information structure to enable cross-selling
Commerci between Mortgage and Savings Bank customers
al and
Mortgage
Lead generation and credit checking system for
wholesale banking customers.

CAPITAL MARKETS

Front-end
Trading
Platform,
Risk
Management,
Compliance
Management,
Order
Management,
Fund
Accounting

Design/Development of fixed income

derivatives trading application.

Design/Development of portfolio risk data

mart.
Functional and regression testing for a
foreign exchange derivatives trading
system.

CREDIT SERVICES

Risk
Managemen
t,
Compliance
Managemen
t, Credit
Application

Design/Development of compliance
management system for credit derivatives.

Interfacing of a home grown pricing engine

a credit management package.

TRANSACTION SERVICES

Equity/Fixed
Income Backend
Processing,
Funds
Transfer,
Compliance

Design/Development of a funds transfer

system
compliant with Single Euro Payment Area
(SEPA).

Design/Development of a prototype
system 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/
Compliance
managemen
t and
reporting

Design/development of a comprehensive
data warehouse to track customer profiles
and funds profile for a leading mutual fund
company.
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,
Health

Healthcare comparison shopping online

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 theSecurities
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 COMPANIES

Financial services companies thrive on quick, but
accurate decisions with equally agile competitors
fighting for every transaction within the constantly
changing regulatory framework, which is different
in every country. Keeping up with the fast-changing
requirements for quick decision making,
operational efficiency, accurate accounting and
regulatory compliance makes the business
processes and hence the IT systems very complex
and dynamic.

FINANCIAL SERVICES INDUSTRY

The financial services industry relies heavily on its

information systems and technologies, thus
continuously investing in acquiring, upgrading and
maintaining systems, data and infrastructure.
Robust, responsive, secure, high quality, reliable
and accurate infrastructure and software backbone
is absolutely essential to survive and thrive in this
competitive 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 Money
Management), Securities Analysis, Financial Planning , Wall Street

CAUSES FOR FINANCIAL INNOVATION

Low
profitablity
Global
impact

Customer
services

Keen
Competition

Investor
awareness

Thank you
Submitted by Anjali Patel
Roma
Gajhbhiye

IM2K805
IM2K8-