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{{Short description|Economic service provided by the finance industry}}
{{Finance sidebar}}
'''Financial services''' are [[service (economics)|economic services]] tied to [[finance]] provided by [[financial institution]]s. Financial services encompass a broad range of [[tertiary sector of the economy|service sector]] activities, especially as concerns financial management and [[consumer finance]].
<span class="anchor" id="Industry"></span><!-- definitional redirect -->The '''finance industry''' in its most common sense concerns [[commercial bank]]s that provide [[market liquidity]], [[derivative (finance)|risk instruments]], and [[broker|brokerage]] for large [[public company|public companies]] and [[multinational corporations]] at a [[macroeconomics|macroeconomic scale]] that impacts [[domestic politics]] and [[foreign relations]]. The extragovernmental power and scale of the finance industry remains an ongoing controversy in many industrialized Western economies, as seen in the American [[Occupy Wall Street]] civil protest movement of 2011.
Styles of financial institution include [[credit union]], [[bank]], [[savings and loan association]], [[trust company]], [[building society]], [[brokerage firm]], [[payment processor]], many types of [[broker]], and some [[government-sponsored enterprise]].<ref>{{cite web |title=Financial Services: Getting the Goods |url=http://www.imf.org/external/pubs/ft/fandd/basics/finserv.htm |publisher=IMF |access-date=8 September 2015 |date=28 March 2012 |last=Asmundson |first=Irena |work=Finance and Development |archive-date=5 November 2015 |archive-url=https://web.archive.org/web/20151105132338/http://www.imf.org/external/pubs/ft/fandd/basics/finserv.htm |url-status=live}}</ref>
Financial services include [[accountancy]], [[investment banking]], [[investment management]], and personal [[asset management]].
Financial products include [[insurance]], [[credit card]]s, [[mortgage loan]]s, and [[pension fund]]s.
[[File:Financial Services Authority Seychelles logo on building.jpg|thumb|[[Seychelles Financial Services Authority]] logo on building]]
== History ==
{{See also|Global financial system#History of international financial architecture}}
[[File:Access to a financial account or services, OWID.svg|thumb|upright=1.3|Change in access to a financial account or services between 2005 and 2014 by country<ref>{{cite web |title=Access to a financial account or services |url=https://ourworldindata.org/grapher/access-to-a-financial-account-or-services |website=Our World in Data |access-date=15 February 2020 |archive-date=15 February 2020 |archive-url=https://web.archive.org/web/20200215222454/https://ourworldindata.org/grapher/access-to-a-financial-account-or-services |url-status=live }}</ref>]]
The term "financial services" became more prevalent in the [[United States]] partly as a result of the [[Gramm-Leach-Bliley Act|Gramm{{ndash}}Leach{{ndash}}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.<ref>{{cite web|url=http://thomas.loc.gov/cgi-bin/bdquery/z?d106:SN00900:@@@D&summ2=m&|title=Bill Summary & Status 106th Congress (1999–2000) S.900 CRS Summary – Thomas (Library of Congress)|access-date=2011-02-08|archive-date=2013-08-12|archive-url=https://web.archive.org/web/20130812070106/http://thomas.loc.gov/cgi-bin/bdquery/z?d106:SN00900:@@@D&summ2=m&|url-status=dead}}</ref>
Companies usually have two distinct approaches to this new type of business. One approach would be a bank that simply buys an insurance company or an [[investment bank]], keeps the original [[brand]]s of the acquired firm, and adds the [[Takeover|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 insurance division or brokerage division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company.{{Cn|date=March 2024}}
== Relationship to the government ==
The financial sector is traditionally among those to receive government support in times of widespread economic crisis. Such bailouts, however, enjoy less public support than those for other industries.<ref>The Economist, April 4th 2020, page 51.</ref>
== Banks ==
{{Main|Bank}}
=== Commercial banking services ===
{{Main|Commercial bank}}
A commercial bank is what is commonly referred to as simply a bank. The term "[[Commerce|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 [[Bond (finance)|bonds]] (debt) or [[share capital]] (equity).
The primary operations of commercial banks include:
* Keeping money [[safe]] while also allowing withdrawals when needed
* Issuance of [[chequebook]]s so that bills can be paid and other kinds of payments can be delivered by the post
* Provide [[Unsecured loan|personal loan]]s, [[Loan|commercial loans]], and [[mortgage loan]]s (typically loans to purchase a home, property or business)
* Issuance of [[credit card]]s, processing of credit card [[Electronic funds transfer|transactions]] and billing
* Issuance of [[debit card]]s for use as a substitute for [[cheque]]s
* Allow financial transactions at branches or by using [[automatic teller machine]]s (ATMs)
* Provide wire transfers of funds and [[electronic fund transfer]]s between banks
* Facilitation of standing orders and direct [[debit]]s, so payments for bills can be made automatically
* Provide [[overdraft]] agreements for the temporary advancement of the bank's own money to meet the monthly spending commitments of a customer in their current account.
* Provide [[internet banking]] system to facilitate customers to view and operate their respective accounts through the 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]] service for financial and other documents
* Accepting deposits from customers and providing credit facilities to them.
* Sell investment products like mutual funds Etc.
The United States is the largest commercial banking services ___location.
=== Investment banking services ===
[[File:Singapur financial district by night (25449263528).jpg|thumb|Singapore financial district by night (25449263528)]]
{{Main|Investment banking}}
*[[Underwrite|Underwriting]] debt and [[Share capital|equity]] for the private and [[public sector]] for such entities to raise capital.
*[[Mergers and acquisitions]] – Work to underwrite and advise companies on mergers or takeovers.
*[[Structured finance]] – Develop intricate (typically derivative) products for high net worth individuals and institutions with more intricate financial needs.
*[[Restructuring]] – Assist in financially reorganizing companies
*[[Investment management]] – Management of assets (e.g., real estate) to meet specified investment goals of clients.
*[[Securities research]] – Maintain their own department that services to assist their traders, clients and maintain a public stance on specific securities and industries.
*[[Broker]] Services – Buy and sell securities on behalf of their clients (sometimes may involve financial consulting as well).
*[[Prime brokerage]] – An exclusive type of bundled broker service specifically meant to service the needs of hedge funds.
*[[Private banking]] – Private banks provide banking services exclusively to [[high-net-worth individual]]s. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking service.
New York City and 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.<ref name="Roberts20082">{{cite book|title=The City: A Guide to London's Global Financial Centre|last=Roberts|first=Richard|publisher=Economist|year=2008|page=2|id={{ASIN|1861978588|country=uk}}}}</ref>
== Foreign exchange services ==
[[File:Foreign Exchange machine.JPG|thumb|Foreign exchange machine]]
FX or Foreign exchange services are provided by many banks and specialists [[Foreign exchange company|foreign exchange brokers]] around the world. Foreign exchange services include:
*[[Bureau de change|Currency exchange]] – where clients can purchase and sell foreign currency banknotes.
*[[Wire transfer]] – where clients can send funds to international banks abroad.
*[[Remittance]] – where clients that are migrant workers send money back to their home country.
[[London]] handled 36.7% of [[World currency|global currency]] transactions {{As of|2009|alt=in 2009}} – an average daily turnover of [[United States dollar|US$]]1.85 trillion – with more US dollars traded in London than [[New York (state)|New York]], and more [[Euros]] traded than in every other city in [[Europe]] combined.<ref name="citylondon">{{cite web|url=http://www.cityoflondon.gov.uk/Corporation/LGNL_Services/Business/Business_support_and_advice/Economic_information_and_analysis/Research+and+statistics+FAQ.htm|title=Research and statistics FAQ|publisher=The City of London|access-date=23 February 2012|url-status=dead|archive-url=https://archive.today/20110926180238/http://www.cityoflondon.gov.uk/Corporation/LGNL_Services/Business/Business_support_and_advice/Economic_information_and_analysis/Research+and+statistics+FAQ.htm|archive-date=26 September 2011|df=dmy-all}}</ref><ref>{{cite web|url=http://www.bis.org/publ/rpfx05t.pdf|title=Triennial Central Bank Survey – Foreign exchange and derivatives market activity in 2004|publisher=Bank for International Settlements|date=March 2005|access-date=2018-03-05|archive-date=2010-12-17|archive-url=https://web.archive.org/web/20101217062722/http://www.bis.org/publ/rpfx05t.pdf|url-status=live}}</ref><ref>"[http://www.cityoflondon.gov.uk/Corporation/media_centre/keyfacts.htm Key facts] {{Webarchive|url=https://web.archive.org/web/20120204063613/http://www.cityoflondon.gov.uk/Corporation/media_centre/keyfacts.htm |date=4 February 2012 }}", Corporation of London. Retrieved 19 June 2006.</ref><ref>European Central Bank (July 2017) [https://www.ecb.europa.eu/pub/pdf/other/ecb.euro-international-role-201707.pdf?5155295783d0b744ab5aa5a85d8674c1 "The international role of the euro"] {{Webarchive|url=https://web.archive.org/web/20190921003051/https://www.ecb.europa.eu/pub/pdf/other/ecb.euro-international-role-201707.pdf?5155295783d0b744ab5aa5a85d8674c1 |date=2019-09-21 }}. European Central Bank. p. 28.</ref><ref>Chatsworth Communications (April 6, 2016) [http://www.chatsworthcommunications.com/londons-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/ "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"] {{Webarchive|url=https://web.archive.org/web/20180922064031/http://www.chatsworthcommunications.com/londons-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/ |date=2018-09-22 }}. Chatsworth Communications.</ref>
== Investment services ==
*[[Collective investment fund]] – A fund that acts as an investment pool so investors can put money into a fund that will reinvest it into a variety of securities based upon their common, outlined investment goal.
*Investment Advisory Offices – Run by registered investment advisors who advise clients in financial planning and invest their money.
*[[Hedge fund|Hedge fund management]] – Hedge funds often employ the services of "[[prime brokerage]]" divisions at major investment banks to execute their trades.
*[[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]] – 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. Startup companies are typically fueled by an [[angel investor]].
*[[Family office]] – Investment and wealth management firm that handles a wealthy family or small group of wealthy individuals with financial plans tailored to their needs. Similar to [[private banking]].
*Advisory services – These firms (or departments within a larger entity) service clients with [[financial advisers]] who serve as both, a broker as well as a financial consultant.
*[[Custodian bank|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.<ref>{{cite web|url=http://www.cm1.prusec.com/rschrpts.nsf/$$rschidxw/4A2ACD93260C58E785256FA3005F8D0E/$FILE/PROCESSINGPRIMER25-0076.PDF|title=Prudential: Securities Processing Primer|website=cm1.prusec.com|access-date=2010-12-05|archive-url=https://web.archive.org/web/20070316160410/http://www.cm1.prusec.com/rschrpts.nsf/$$rschidxw/4A2ACD93260C58E785256FA3005F8D0E/$FILE/PROCESSINGPRIMER25-0076.PDF|archive-date=2007-03-16|url-status=dead}}</ref>
[[New York City]] is the largest center of investment services, followed by London.<ref>{{Cite web|url=https://www.theinvestmentassociation.org/assets/files/research/2017/20170914-ams2017.pdf|title=Asset Management in the UK 2016–2017|date=September 2017|publisher=The Investment Management Association|page=12|access-date=5 March 2018|archive-url=https://web.archive.org/web/20180306082626/https://www.theinvestmentassociation.org/assets/files/research/2017/20170914-ams2017.pdf|archive-date=6 March 2018|url-status=dead}}</ref>
== Insurance ==
{{Main|Insurance}}
[[File:National Insurance Services (NIS) - St. Vincent ^ the Grenadines - panoramio.jpg|thumb|National Insurance Services (NIS) – St. Vincent ^ the Grenadines – panoramio]]
*Insurance brokerage – [[Insurance broker]]s shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently several websites have been created to give consumers basic price comparisons for services such as insurance, causing controversy within the industry.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/business/7201345.stm|title=Price comparison sites face probe|date=2008-01-22|work=BBC News|access-date=2009-02-06|archive-date=2009-01-30|archive-url=https://web.archive.org/web/20090130065605/http://news.bbc.co.uk/1/hi/business/7201345.stm|url-status=live}}</ref>
*Insurance underwriting – Personal lines insurance [[underwriter]]s actually underwrite insurance for individuals, a service still offered primarily through agents, [[insurance broker]]s, and [[brokerage firm|stock broker]]s. Underwriters may also offer similar commercial lines of coverage for businesses. Activities include insurance and [[Annuity (financial contracts)|annuities]], [[life insurance]], retirement insurance, [[health insurance]], and [[property insurance]] and [[casualty insurance]].
*Finance and 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 that have adopted the model
*[[Reinsurance]] – Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.
The United States, followed by [[Japan]] and the [[United Kingdom]] are the largest insurance markets in the world.<ref>{{Cite web|url=https://www.abi.org.uk/globalassets/sitecore/files/documents/publications/public/2015/statistics/key-facts-2015.pdf|title=UK Insurance & Long Term Savings Key Facts 2015|date=September 2015|publisher=Association of British Insurers|access-date=5 March 2018|archive-date=5 March 2018|archive-url=https://web.archive.org/web/20180305202744/https://www.abi.org.uk/globalassets/sitecore/files/documents/publications/public/2015/statistics/key-facts-2015.pdf|url-status=live}}</ref>
== Other financial services ==
{{Unreferenced section|date=March 2024}}
*Angel investment networks – A group of [[angel investors]] can create their own network to be the financial foundation for future companies.
*Credit card networking – Companies that serve as the bridge between the retailers and the banks who issue the bank cards. Major credit card networks are: [[UnionPay]], [[Mastercard]], [[Visa Inc.]], [[Rupay]], [[American Express]] and [[Discover Financial]].
*[[Market maker]] - Company that quotes both buy and sell prices in tradable assets in order to create liquidity within the marketplace.
*{{anchor|Conglomerates}}[[Conglomerate (company)|Conglomerate]]s – 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. As a consequence, [[economic capital]] for a conglomerate is usually substantially less than [[economic capital]] is for the sum of its parts.
*[[Debt settlement|Debt resolution]] – 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 market utilities – Organizations that are part of the infrastructure of financial services, such as [[stock exchange]]s, [[Clearing house (finance)|clearing houses]], derivative and commodity [[Exchange (organized market)|exchanges]] and [[payment system]]s such as [[real-time gross settlement]] systems or [[interbank network]]s.
*Payment recovery – Assistance in recovering money inadvertently paid to vendors by businesses, such as by accidental duplicate payment of an invoice or failure to return a deposit.
== Financial exports ==
{{Anchor|Financial exports}}<!-- [[Financial export]] redirects here -->
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 domestic services, an increasing proportion of financial services are now being handled abroad, in other [[financial centre]]s, 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 centre]]s. The increasing competitiveness of financial services has meant that some countries, such as Japan, which were once self-sufficient, have increasingly imported financial services.{{Cn|date=March 2024}}
The leading financial exporter, in terms of exports less imports, is the [[United Kingdom]], which had $95 billion of financial exports in 2014.<ref name=TheCityUK2015>{{cite web|title=UK trade surplus in financial services highest ever|url=http://www.thecityuk.com/media/latest-news-from-thecityuk/thecityuk-uk-trade-surplus-in-financial-services-highest-ever/|publisher=TheCityUK|access-date=5 June 2015|date=21 July 2015|archive-date=8 September 2015|archive-url=https://web.archive.org/web/20150908100039/http://www.thecityuk.com/media/latest-news-from-thecityuk/thecityuk-uk-trade-surplus-in-financial-services-highest-ever/|url-status=dead}}</ref> The UK's position is helped by both unique institutions (such as [[Lloyd's of London]] for insurance, the [[Baltic Exchange]] for shipping etc.)<ref>{{cite book|last1=Clark|first1=David|title=Urban world/global city|date=2003|publisher=Routledge|isbn=0415320976|pages=174–176|url=https://books.google.com/books?id=J21sBa6n46gC&pg=PA174|postscript=none|access-date=2020-09-23|archive-date=2023-02-10|archive-url=https://web.archive.org/web/20230210082254/https://books.google.com/books?id=J21sBa6n46gC&pg=PA174|url-status=live}}; {{cite book|last1=Shubik|first1=Martin|title=The theory of money and financial institutions|date=1999|publisher=MIT Press|isbn=0262693119|page=8|url=https://books.google.com/books?id=m9BWUe9xveQC&pg=PA8|access-date=2020-09-23|archive-date=2023-02-10|archive-url=https://web.archive.org/web/20230210082247/https://books.google.com/books?id=m9BWUe9xveQC&pg=PA8|url-status=live}}</ref> and an environment that attracts foreign firms;<ref name=Roberts2008>{{cite book|last=Roberts|first=Richard|title=The City: A Guide to London's Global Financial Centre|year=2008|publisher=Economist|url=https://books.google.com/books?id=J0vl6CltQjEC&q=the%20city%20richard%20roberts&pg=PA2|pages=1–22|isbn=9781861978585|access-date=2020-11-11|archive-date=2023-02-10|archive-url=https://web.archive.org/web/20230210082255/https://books.google.com/books?id=J0vl6CltQjEC&q=the%20city%20richard%20roberts&pg=PA2|url-status=live}}</ref> many international corporations have global or regional headquarters in the [[London]] and are listed on the [[London Stock Exchange]], and many banks and other financial institutions operate there or in [[Edinburgh]].<ref name=TheCityUK2014>{{cite web|title=UK's financial services trade surplus biggest in the world, dwarfing its nearest rivals|url=http://www.thecityuk.com/media/latest-news-from-thecityuk/uk-s-financial-services-trade-surplus-biggest-in-the-world-dwarfing-its-nearest-rivals/|publisher=TheCityUK|access-date=5 June 2015|date=3 July 2014|archive-date=11 July 2014|archive-url=https://web.archive.org/web/20140711095621/http://www.thecityuk.com/media/latest-news-from-thecityuk/uk-s-financial-services-trade-surplus-biggest-in-the-world-dwarfing-its-nearest-rivals/|url-status=dead}}</ref><ref>{{cite web|title=Special report on services exports|url=http://www.ey.com/Publication/vwLUAssets/EY_ITEM_Club_special_report_on_services_exports_-_full_report/$FILE/EY%20ITEM%20Club%20special%20Report%20on%20Services%20Exports_FINAL.pdf|publisher=EY Item Club|access-date=8 September 2015|date=June 2014|archive-date=4 March 2016|archive-url=https://web.archive.org/web/20160304080359/http://www.ey.com/Publication/vwLUAssets/EY_ITEM_Club_special_report_on_services_exports_-_full_report/$FILE/EY%20ITEM%20Club%20special%20Report%20on%20Services%20Exports_FINAL.pdf|url-status=live}}</ref>
== See also ==
<!-- Please respect alphabetical order -->
{{div col|colwidth=30em}}
* [[Alternative financial services]]
* [[Financial analyst]]
* [[Financial crime]]
* [[Financial accounting]]
* [[Financial technology]]
* [[Financialization]]
* [[Insider threat]]
* [[International Monetary Fund]]
* [[List of countries by share of population with access to financial services]]
* [[List of largest financial services companies by revenue]]
* [[Payment card industry]]
* {{slink|Valuation (finance)#Valuing financial services firms}}
{{div col end}}
== References ==
{{Reflist}}
== Further reading ==
*{{Cite book|last = Porteous | first = Bruce T. |author2=Pradip Tapadar | title = Economic Capital and Financial Risk Management for Financial Services Firms and Conglomerates| publisher = Palgrave Macmillan |date=December 2005 | isbn = 1-4039-3608-0 }}
== External links ==
* [http://www.hks.harvard.edu/m-rcbg/CSRI/publications/report_19_EO%20Finance%20Final.pdf 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]
* Fintech Trading Instrument [https://www.tradeonquotex.com/ Quotex]
{{Industries}}
{{Authority control}}
{{DEFAULTSORT:Financial Services}}
[[Category:Financial services| ]]
[[Category:Financial markets]]
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