Financial services are not financial goods per se, but are part of a financial transaction. The sector includes many different types of transactions ranging from investment funding to payment recovery services. This article will discuss what these different types of services entail and what differentiates them from one another. You can find out more about these types of financial services by reading the following sections. This article also covers information based financial services and payment market utilities. You can also learn about Retail banking and payment market utilities.
Information based financial services
The field of information based financial services encompasses the various types of information that are available to companies in the finance industry. Information obtained from credit bureaus, insurance applications, major consumer durable purchases, and investment activity are just a few examples of information that financial services companies use to better assess a customer’s needs and capacity. However, there is an additional aspect to information based financial services that is not readily apparent. This type of information is often confidential, which means it is not available for public consumption.
Payment recovery services
Payment recovery services are companies that pursue past due accounts on behalf of debtors. They typically purchase debt from the original creditor for pennies on the dollar, or a fraction of the cost. Some companies are not owned by the original creditor, but are paid to collect for them. In such cases, they will contact debtors via phone or mail. Some services report to credit bureaus. In other cases, they may also try to obtain a judgment against the debtor in bankruptcy.
Payment market utilities
Financial services that are not directly related to payment transactions are referred to as utilities. They are a middle ground between full outsourcing and in-house development of standardized solutions. Banks can benefit from utilities by outsourcing non-differentiating activities and by leveraging network effects to develop standardized solutions. A typical utility will address approximately 20 to 25 percent of a bank’s cost base. Eventually, it will scale to cover 50 to 60 percent of a bank’s costs.
Retail banking
Consumer and personal banking are forms of retail banking. Retail banking involves providing financial services to the public, as opposed to wholesale banking. It also includes lending, insurance, and wealth management. The purpose of retail banking is to provide consumers with the products and services they need. The primary difference between retail and wholesale banking is that retail banks are more focused on the needs of individual consumers. However, there are many similarities between the two types of banking. Let’s take a look at some of the major differences.
Commercial banking
Most traditional banks offer both retail and commercial banking. However, business owners aren’t required to find a new bank to access these services. Private banks are banks that have the majority of capital shares held by private businesses or individuals. They are often registered as limited liability companies. Public banks, on the other hand, are owned by the government. Foreign banks are established outside of the United States and have operating branches there. Commercial banks serve both businesses and consumers.
Investment banking
The structure of an investment bank varies depending on the bank. Generally, deals are done in small teams of four to six bankers. Deal material is created by analysts, and the managing director has the final say. Investment banking teams may consist of bankers from various Product or Coverage groups. The roles of each individual banker can be quite diverse. A typical associate’s duties will include research, writing, and generating reports.