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. As of 2004, the financial services industry represented
20% of the market capitalization of the S&P 500 in the United States.[1]

Contents
[hide]

• 1 History of financial services

o 1.1 In the United States
• 2 Banks
o 2.1 Banking services
o 2.2 Other types of bank services
• 3 Foreign exchange services
• 4 Investment services
• 5 Insurance
• 6 Other financial services
• 7 Financial crime
o 7.1 UK
• 8 Market share
• 9 See also

• 10 References

[edit] History of financial services

[edit] In the United States

The term "financial services" became more prevalent in the United States partly as a
result of the 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.[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, 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., in 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.
[edit] Banks
Main article: 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).

[edit] Banking services

The primary operations of banks include:

• Keeping money safe while also allowing withdrawals when needed

• Issuance of checkbooks so that bills can be paid and other kinds of payments can
be delivered by 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 checks
• 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 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 service for financial and other documents

[edit] Other types of bank services

• 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 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 debt and equity, assist company deals
(advisory services, underwriting and advisory fees), and restructure debt into
structured finance products.
• Bank cards - include both credit cards and debit cards. 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".

[edit] 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 - where clients can send funds to international banks abroad.
• Foreign Currency Banking - banking transactions are done in foreign currency.

[edit] Investment services

• Asset 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.
• 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]

[edit] 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.

[edit] 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.
• 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 payoff
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. There
are many services/companies that can assist with this. These can include debt
consolidation, debt settlement and refinancing.

[edit] Financial crime

[edit] 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]

[edit] 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.

[edit] See also

Book:Finance
Books are collections of articles that can be downloaded or ordered in print.

• Accounting scandals
• Alternative financial services
• 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