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In: Finance

What are the main sectors in the financial services industry? Identify 10 and discuss (100–120 words)...

What are the main sectors in the financial services industry? Identify 10 and discuss (100–120 words) how they interact.(Please type up your answer)

Solutions

Expert Solution

Financial services are the economic services performed by the financial institutions such as banks, insurance companies, mutual fund companies, credit card companies and government enterprises. Financial services institutions helps in the overall economic development of the nation.

Main sectors in the financial services sectors are-

  1. Commercial Banking Services: It includes a bank accepting deposits for lending and repayable on demand or at the end of given period. The primary services of Commercial bank includes-
  • Issuance of chequebooks
  • Providing personal loans, mortgage loans and commercial loans
  • Issuing debit and credit cards
  • Provide electronic fund transfers
  • Providing overdraft facility to customers. 2) Investment Banking Services: It includes underwriting services of securities, aid in the sale of securities, financial advisory services related to merger and acquisitions, brokerage services, private banking services to to high net worth clients like wealth management and tax planning etc. 3)Insurance sector: Here, insurance companies provide hedge services against the risks which are uncertain. An insurance policy is provided to insured stating the terms and conditions under which insurer will compensate the insured. Types of insurance provided are health insurance, life insurance, motor insurance, casualty insurance, property insurance etc. 4) Alternative Financial services: It is a financial services provided to low income individuals outside the traditional banking services. It includes pay day loans, rent to own agreements, refund anticipation loans, sub prime mortgage loans money orders and money transfers. 5)Independent financial advisor: These provide financial services to their clients regarding and recommend suitable financial products available in the market tailoring to their requirements. IFAs advice generally on investments, retirement planning, insurance and mortgages. 6)Accountancy company: Accounting firms provide customized services to meet your requirements such as book-keeping, auditing, tax planning, fraud investigation, outsourcing and management consultation. 7)Credit card companies: Here, credit card networks companies such as Master card and Visa card, authorize and process financial transactions. But credit card issuers approve your credit card application, set your credit limits, collect your monthly payment and offer rewards. 8)Real Estate: Real Estate includes services related to investment in properties, setting the portfolio to maximize value of their assets and also provide marketability to their properties. 9)Government sponsored enterprises: GSE provide credit to targeted sectors such as farm credit and education sector of the economy to make them transparent and efficient. 10)Stock Brokerages: Stock brokerage firm facilitate buying and selling of financial securities between buyer and seller. These firm usually charge a brokerage fees on the transactions in exchange of their services.

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