FINANCIAL SERVICES AND MARKETS

Subject Code:21BAT-372
(BBA-Semester VI)
Topic:- Financial services
Faculty Name- Dr. Arshpreet Kaur

DISCOVER . LEARN . EMPOWER

Course Outcome
CO Title Level
Number

CO1 To identify the functional aspects of financial products Remember

Source:https
://www.google.com/search?q=financial+instit
ution+images&tbm
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 Introduction
• Financial Services are the largest industry in the world in terms of earning. A financial
service is a term used to refer services provided by the financial industries. In a
narrow sense, a financial service otherwise called financial intermediation includes all
types of financial activities, which are carried on by financial institution.
• Financial services refer to the activities of channelizing the flow of funds from the
savers to the users. It involves the mobilization of savings of the persons and
institutions who have surplus funds and allocating or lending them to the persons and
institutions who are in need of such funds
The financial service market comprises of four important constituents:
1. Market Players: Commercial banks, financial institutions, stock brokers, etc.
2. Specialized institutions: Credit Rating agencies, factoring, discount house, etc.
3. Regulatory bodies: SEBI, RBI, IRDA, Banking and Insurance Department of
Central Government
4. Financial Instruments Equity instrument, debt, instrument and zero coupon bonds
• Financial services can be defined as the products and services offered by institutions like banks of
various kinds for the facilitation of various financial transactions and other related activities in the
world of finance like loans, insurance, credit cards, investment opportunities and money
management as well as providing information on the stock market and other issues like market
trends.
• The Gramm-Leach-Bliley Act enacted in the late 1990s brought the term financial services into
prominence when it repealed earlier laws which forbade a bank or any financial institution from
venturing into fields like insurance and investment.
• The result was the merger of many organizations offering the above mentioned services under one
banner giving rise to a new type of banking popularly known as Commercial Banking and a
number of organizations like Citibank came into existence purely as service providers.

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 The Finance services industry though a highly profitable Industry with respect to earnings does
not count for a large share of the market and also employs a lesser number of people as compared
to some of the other Industries. Some of the major service providers and commercial banks in this
field are:
1. Citibank
2. HSBC
3. Standard Chartered
4. Citigroup
5. Merrill Lynch
6. Morgan Stanley
7. ING (Investment)
8. American Express (Credit Card)
9. VISA (Credit Card)
10. Allianz (Insurance)

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 Features
• Customer Oriented: Financial service industry is a customer-oriented service
industry. The customer is the king and his requirements must be satisfied, in full
should be the basic target of any financial service industry.
• Intangibility: A peculiar feature of the companies involved in financial service is
that they provide only intangible products to their customers. The financial product
cannot be seen or touched.
• Technology: The quality of service of any financial service company depends upon
the technology. The analysis of any firm involves the technology relationship
between input and output.
• Financial Service Market: The Financial service market comprises market players,
specialized institutions, regulatory bodies and financial instruments
• Economic Growth: Financial Service rendered by the financial intermediaries
bridge the gap between lack of knowledge on the part of inventors and he increasing
sophistication of financial instruments and markets. These financial services are vital
for creation of firms, industrial expansion and economic growth.
Objectives of financial services
1. Mobilization of funds
2. Allocations of funds
3. Rendering of specialized services like credit rating, venture capital financing, leasing, housing
finance, etc.,
4. Contributing to the economic development of the country
Advantages / Significance of financial services
1. Promotion of savings
2. Economic growth
3. Capital formation
4. Provision of liquidity
5. Financial intermediation
6. Contribution to GDP & GNP
7. Creation of employment opportunities

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Emerging Trends in Financial
Services
• Every industry undergoes periodic changes and in that context the financial services industry is
certainly not an exception. The only exception is that changes in the financial services industry
have occurred more rapidly as compared to other industries, the most probable reason being its
dynamic nature. Emerging trends in the financial services industry provide a definitive clue to the
ongoing changes and here are some of those to help you get a better understanding:
• Increased Automation-With rapid advancements in Information Technology and allied systems
and processes, the financial services industry has witnessed increased automation over the years.
Financial projects are still managed under the watchful eyes of highly qualified professionals, but
the actual processing and transacting is being done by automated software systems. It is certainly a
positive development because automated systems eliminate the chances of human errors and
inaccuracies and also allow firms to handle large financial projects with veritable ease.

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• Diminishing Size Limitations -At the beginning, financial services outsourcing was embraced
mostly by business heavyweights such as Goldman Sachs, Lehman Brothers, Morgan Stanley, Citi
Group etc. Things however have changed over the years as can be seen from the dramatic increase
in the number of Small & Medium Enterprises (SMEs) hiring financial outsourcing services.
Business size is no longer a criterion for choosing financial services outsourcing, something that is
good news for both SMEs and small outsourcing service providers that cater to niche market
segments.
• Rapidly Expanding Wider Presence- There was a time when financial services were limited to a
few advantageous geographical locations like Mumbai. However, due to rising demand for
financial services, other locations like countries such as Ahmedabad, New Delhi, Chandigarh,
Kolkata, etc., have also started offering financial services. It signifies that financial services
industry now enjoys a wide presence and is not limited to a few regional pockets. And that is good
because businesses now have a lot more options to choose from.
• Introduction of Web Technology- Predicting the future is never easy, but in the use of web
technology for the financial services industry, there are a number of trends and technologies that
are in their early stages and show significant promise for the sector. In addition, websites can offer
dialog-based or even voice-based assistance for users of the site. This is will make it much easier
to service complex financial products online to both consumers and to agents.

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• Finally, with the ubiquity of mobile phones and the increasing market penetration, more and more
information and communication will be channeled through these routes. To manage this
effectively, it is important to choose a content management solution that will allow these channels
to be used without the need for complex and time consuming reuse of information.
• Wireless networking has lead to the market place being flooded with all sorts of new internet
appliances, mobile devices and gadgets that provide users a low-cost alternative to PCs.
Handhelds, PDAs, Smartphones, Blackberries, Tablet PCs, Notebooks/Laptops name just a few of
the options now available and manufacturers are continually trying to launch new devices in an
attempt to provide the right hybrid device that sits somewhere between the Smartphone and the
PDA. This trend is likely to continue for the foreseeable future.

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THANK YOU

For any queries