Financial Services Essay, Research Paper
What is meant by financial services?
Financial services in today’s society has become more than what a high street bank can offer you from behind a counter. It has become a diverse functional area within any economically adequate society. Throughout this essay I have tried to grasp the main concepts concerning Financial Services and condense them into an essay of relatively minor proportions in comparison to the subject matter. I hope I can give you, the reader an insight into the world of financial services in all its diversity.
So what is meant by “financial services”. To be honest there is no straightforward definition such is the spread of financial services across the business spectrum. We can however dam different organisation under the heading of financial services to give you an idea of what financial service intails.
Financial service is understood to include “banking, insurance, building societies, stock brooking and investment services”. These are the 5 main areas described by Brian Anderton in his 1995 book “current issues in financial services”. Brian also found it difficult to pinpoint a definitive meaning and found it easier to list organisation associated.
Going in to detail when concerning the institution aids in creating a further understanding of financial services yourself. Of the main financial institutions banks are the most common. Banks can be either “commercial” or “merchant”. Dealing with retail and investment respectively. Commercial banks are easily found on the high street and rely on deposits from ordinary people. There is very little interest paid to their savings accounts however savers can borrow sums of money from the banks from which the banks make profit from interest on the loan. Merchant banking is slightly more complicated when dealing with finances and in my opinion is more exciting. Merchant banks arrange finance deals and charge for this service. This investing is slightly risky and less straightforward. However the profit rewards outweigh the timescale and effort needed to invest.
Investment institutions such as pensions and insurance companies again take the liquid earnings of their clients and invest them in a wide range of profit making investments. Payment to these companies often takes the form of monthly payments taken by debit from wages. These companies give clients a sense of security, and in the claim free years to come, the chance of a large windfall payment.
Large investment institution deals with modern day trading, the trading of assets and debt. It is not fast companies that trade but individual people. In this hectic rat race people and institutions stand to loose and gain huge amounts of money. Due to the uncertain nature of this trade, people and institutions are extremely keen to lend as this is seen as a stable funds reclaim if it becomes necessary to do so.
The textbook definition for GDP- across domestic product is the total value of all the goods and services produced by the residents in this country. The fact that the financial sector and service sectors are growing is in no doubt, neither is the quite mind blowing increase in gross domestic product from years 1952 – 1992. An overall increase of 21% of EDP from ?381m in 1952 to ?121704m in 1992 this growth is nothing less than remarkable.
This forty-year spell has seen such a huge financial success in terms of the sheer man of profit gain that the reasons for FS contributing so greatly to the GDP must be assessed.
In the past Britain could be seen as a true industrialist profits made and traded through visible earnings such as machinery and farm produce. However the rise in strength of nation such as the US and major Asian powers, with their seemingly endless resources has seen the death of Britain the industrial workhorse.
On this level Britain could have remained at a financial and trading standstill. Not so however Britain has found its new market – the financial market. And with an educational population Britain set about resurrecting the countries profit making ability through invisible earning of finance matters.
The idea of visible and invisible earnings is extremely important to Britains economy. So let me explain that apart from obvious differences between visible and invisible.