Examples of Financial Services

The financial services are the economic activities carried out by different Business and that they have to do with the management and administration of money. It is a large sector of the industry of the services, in which banks, insurance companies, stock brokers, investment funds, credit card companies, among many other financial actors, have a place.

The term "financial" comes from the fact that these services have to do with the money received, due and to be received, that is, with the finance and expense planning. In fact, financial services began to be talked about towards the end of the 20th century, when the creation of large consortiums of these services, born from the merger of large banks, investment funds and companies insurers. Today these types of companies exist practically in all the geographies of the planet.

Financial services serve to provide people (individuals or legal entities) access to so-called "financial goods", that is, investment instruments, loans of various kinds and other financing or multiplication tools of the money. In other words, those who need money to invest in a business, for example, can access different types of loans; while those who have a sum of unproductive money can make investments and earn a dividend based on the interest generated; and also those who wish to protect their property can opt for risk insurance. In all these matters, the financial sector acts as an intermediary, and in return can obtain sums fixed amounts of money, percentages of the final profits or part of the ownership of the goods of the people.

Financial service providers are extremely important economic actors in the complex economy contemporary. They allow the distribution of investment risk, that is, they accompany those who risk innovating and producing, ensuring that the losses do not fall on a single person. In addition, they allow money to be used for productive purposes.

Examples of financial services

Some examples of financial services are:

1. risk insurers. They are companies that sign with their customers financing contracts in case something bad happens to them or their businesses. In exchange for a monthly payment, the insurance company assumes some of the risks that the client must face, such as replace assets (insurance against theft, fire, etc.), or leave money to your family in case of death (insurance of life).
2. stock brokers. They are professionals from the world of finance who mediate between a client with money and another who needs it, facilitating loan, investment or insurance transactions. For example, a broker can help a person who has extra money to buy shares in a company that requires private participation, and the broker takes a commission in the process.
3. Fixed investment terms. They are banking mechanisms available to savers, which consist of investing a stipulated amount of money for a month or several months, a term for which the money will not be available to the saver (or at least not without a penalty), since the bank will have invested it in short or medium loans term. In exchange, the bank will pay the saver certain interest according to a rate much higher than the average.
4. mortgage loans. They are loans provided by banks and financial entities for those who require a large sum of money to invest. An asset of equivalent value is offered (as collateral for repayment of the loan), which is henceforth considered to be mortgaged. The latter means that ownership of the property is subject to payment of the entire amount received on loan. This is a common mechanism for the acquisition of houses, for example: a loan is requested to buy a house and it is placed under mortgage, so that it is only really owned when we have finished paying the bank the sum owed.
5. credit companies. Whether they are commercial banks or rather lending companies, these organizations offer credit cards and financing plans by installments, which allow their clients to obtain quick money or consume goods that are beyond their immediate capacity to payment. Thus, the company lends the money to the consumer and, in return, the consumer returns it through monthly payments, the amount owed plus an extra interest rate.

References:

• "Financial services" on Wikipedia.
• “What are financial services?” by Irena Asmundson in the International Monetary Fund (IMF).
• “Financial services” in the World Trade Organization (WTO).
• “What are financial services?” in fassil bank.

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