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What Is Financial Services?
What is financial services? This question may come up to anyone who is currently handling any kind of financial transactions for his or her organization. Financial services include a variety of financial products such as loans, investments, invoice financing, invoice discounting, cash management and many other financial products. Financial services also include administrative services like billing, data entry, account management and payroll administration.

A company's success largely depends on the ability of the managers, executives, brokers and shareholders to manage the resources. Therefore, it is extremely essential for any company to have a sound financial strategy. Managing finance has become a crucial part of any business's operations. Most importantly, any firm which seeks help from external agencies such as financial institutions will need to rely on financial services. In this article, I will cover what is financial services and how they are used by companies in today's day and age.

The term 'financial services' actually encompasses a wide range of activities undertaken by financial institutions. They include clearing of bill payments, providing banking services, underwriting and guaranteeing loans, providing investment advice, offering investment securities and maintaining information systems that store customer data. With a large number of financial institutions existing today, there is a huge demand for their services. However, there are many differences among them. Large banks and large investment firms have extensive experience in dealing with different kinds of financial transactions. On the other hand, small banks and little investment firms usually rely on guesswork and experience to deal with financial transactions.

What is financial service? Financial services include a wide range of activities that are undertaken to enhance and support financial operations. Some of these services include:

Merchant Banking Merchants engages in financial services through the payment processing business. This business is called Retail Payment Processing or simply PCP. Businesses provide merchant banking so that merchants can accept Credit Card transactions from customers who pay using those cards. This is a very important sector of the financial services industry. There is a wide range of merchants and their products and services are traded on the worldwide market.

Debt Consolidation and Management is a process whereby financial institutions to help people get rid of high interest debts and other high cost debt burden by merging them into a single manageable loan. This helps the debtor to pay only one installment per month instead of several. Credit ratings and scores are important factors for any financial institution. These are closely monitored by the creditors so that they do not suffer a loss due to nonpayment of the debt.

Risk Management is another aspect of the financial service industry. Most of the institutions are involved in various types of insurance policies and risk management is an important part of those policies. These institutions help to reduce the risk to the creditors by accepting lower than market value risk settlements and bailouts. Creditors are always on the alert for new credit card offers from merchants and therefore they try to provide new credit card deals with better benefits to attract more customers.

Risk Management services include various other aspects of the financial institutions. They are involved in many macro and micro economics services such as economic growth, inflation and budget planning. Some other services include foreign exchange, commodities, equities, bonds and commodity markets. These services help to keep a tab on the fluctuating prices of almost all the commodity and are very helpful in making economic and investment decisions. A good example of a financial institution providing risk management services is the Blackrock.

Distribution is a part of almost all the financial services offered by financial institutions. These services include sales of products and services, stock trading, options trading and foreign exchange trading. These institutions also get involved in various other activities such as insurance, commodity and bond markets and real estate. They have direct access to various forms of capital.

Other services like international remittance and travel are also provided by financial institutions. The demand for money transfer services like international remittance has increased in the recent times. This service helps to send money across international boundaries for a fixed amount at a fixed rate of fee or exchange rate. Another important financial services like financial engineering and insurance is also provided by financial institutions. Financial engineering helps to create financial systems and models for a particular business. Insurance provides protection for assets and individuals.

Consumer Protection Act has been drafted so that the consumer is protected from any kind of frauds. In this regard, it has been proposed to have an agency called Financial Service Bureau to monitor all financial transactions. Financial analysts play an important role in analyzing all the threats and risks posed by the financial services industry and help to formulate a proper solution so that they can be avoided in future.
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