Site Loader
Rock Street, San Francisco

 

 

Financial
Services

 

What
is Financial services

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

Financial
services means the various services provided by the financial markets . It
covers the functioning of banks , financial institutions , insurance companies
and national pension system. Companies in the financial services industry are
responsible for managing money

Ø Commercial banking

They
form the foundation of the financial services
industry. The operations of the commercial banking includes the  

·        
Safekeeping of
deposits

·        
Issuance of credit  debit cards and

·        
Lending of money

Ø Investment banking

They deal with high net worth clients and
not the general public . These banks perform following functions ;-

·        
Underwrite
deals  

·        
Secure
access to capital markets

·        
Offer
wealth management and tax advice  

·        
Advice
companies on mergers and acquisition and

·        
Facilitate
buying and selling of stocks

 

 

Investment banking also offers services
such as portfolio management , client reporting  other back office services . Financial
advisers and discount brokerages also occupy this niche. Private equity funds ,
venture capital providers and angel investors supply investment capital to the
companies in exchange for ownership stakes or profit participation.

Ø Insurance Companies

This is also one of the
important sub sector of financial services and their brokers are different     from that of the agents of investment
banking . They assess the risk of insuring clients
and also advices investment bankers on loan risk

 

 

 

 

 

Different types of
Financial Services includes  :-

·        
Business loans

·        
Checking accounts

·        
Saving accounts

·        
Debit and credit cards

·        
Merchant services( credit card
processing , reconciliation and reporting, check collection)

·        
Cash management

Banking
sector accounts for 64% of the total asset of the entire financial system and
therefore needs attention.

 

Digitisation
and Financial services

 

Financial
service industry is undergoing through a great transformation where FinTech-financial services technology
is finding new ways to make spending  ,
managing and investing our hard earned money easier than before . Consumers are
getting attracted towards the digital currency, digital deposits and even the
digital investment which is forcing the financial institutions to rethink on
the methods being currently practiced and it has been seen that rise of FinTech
has huge implications for financial services industry.

The
digitization which the firms are aiming for will need proper survey as most of
the people in India did not even had bank accounts before the Jan Dhan yojna and
still most of the people in India do not even have proper internet connectivity

 

 

 

 

 

The
employees working in the financial institutions also face major problems in
this digital transformation and as per the recent study following observations
have been made :-

·        
A full 76 percent of the survey
respondents consider it very important or extremely important to work for an
organization that is digitally enabled or is a digital leader.

·        
Only 38 percent of FSI respondents agree
or strongly agree that their organization offers employees the resources or
skill-development opportunities they would need to thrive in a digital
environment.

 

Financial institutions
are taking steps to go for digitisation :-

 

·        
Technology is rapidly reshaping the
financial services workforce. Digital tools can do more of the “heavy lifting,”
freeing up staff to concentrate on more complex and value-added functions.

·        
Many financial institutions will launch
or build out virtual assistants in 2018. This goes far beyond technology. In
designing bots, firms make branding choices

·        
2017 Digital Banking survey found that
46% of customers skipped bank branches altogether, relying instead on
smartphones, tablets, and other online applications

·        
Going for digitization is more than a
money problem. Many financial institutions understand that they need to invest
if they are to transform. They know they can’t keep running COBOL on mainframes
if they want to compete.

 

 

 

 

 

 

 

 

 

 

 

 

Government
of India has become active in this area and is taking many steps to transform
India into a digital India .Soon after the launch of the Digital India program
government of India launched 22 schemes to make the new benefits as well the
existing benefits more accessible to the masses. The  aim of the government is to bring 80 per cent
of the people in the formal system through this digitization of the financial
services in the country .

 

 

 

 

 

 

 

 

 

Schemes launched by the
Government

 

1-   
Pradhan
mantra Jan dhan Yojna (PMJDY)

 

This is not a scheme
but a national mission launched with the aim of providing financial services to
the maximum number of people who were till now deprived of basic financial
benefits . The basic services under this scheme includes

·        
saving and deposit accounts ,

·        
remittance ,

·        
credit

·        
Insurance

·        
Pension

All these services are
being provided at affordable rates

 

 

Benefits
from this scheme so far

 

·        
29.43 crore accounts opened so far

·        
Rs. 65532.77 crore in these bank
accounts

·        
1.26 bank Mitras delivering branchless
services in many areas

·        
People are getting the benefits of
government schemes directly in their bank accounts

·        
Interest rate on the deposits are 4%

 

 

 

 

 

 

 

 

2-   
Pradhan
Mantri Jeevan Jyoti Bima Yojna

 

The life cover of 2
lakh is given under this scheme and premium to be paid is only 330 per annum

·        
This service is being provided by the
Life Insurance corporation and other insurers who have willingly agreed to
provide the services after the tie up with various banks

·        
Total of 62166 claims were reported
under this scheme out of which 59118 have been disbursed

 

3-   
Atal
Pension Yojna (APY)

 

APY is open to all saving bank/post office saving bank account holders
in the age group of 18 to 40 years and the contributions differ, based on
pension amount chosen.

 

·        
Subscribers
would receive the guaranteed minimum monthly pension of Rs. 1,000 or Rs. 2,000
or Rs. 3,000 or Rs. 4,000 or Rs. 5,000 at the age of 60 years.

·        
Under APY,
the monthly pension would be available to the subscriber, and after him to his spouse
and after their death, the pension corpus, as accumulated at age 60 of the
subscriber, would be returned to the nominee of the subscriber

Other schemes are :-

·        
Conversion
of Kisan credit card into Rupay Kcc’s

·        
Merger of
Bhartiya mahila bank with SBI

·        
Pradhan
Mantri suraksha Bima yojna (PMSBY)

 

 

 

 

 

 

Top five activities which financial
institutions are doing in order to progress towards the digitization are :-

 

·       
Swallowing
the whole digital pill

To
retain and attract customers, many banks are beginning to move beyond their
remote banking apps and more widely adopt digitization via e-forms and workflow
systems, which they can rapidly implement without deep integration into complex
legacy architectures

·       
Capitalizing
on the “zero-friction” model

More
and more banks are embracing a client service model that requires minimal
contact with their customers. Banks increasingly engage technology providers
and make significant investments in near field communication (NFC)

Release
of Apple Pay’s mobile payments service for iPhones and the introduction of Host
Card Emulation (HCE) for Androids have made a lot of slow-moving banks act
quickly

·       
Drilling
into data for deeper insight

 To
enhance customer loyalty and lifetime value, banks and financial services firms
are seeking niche service providers that can offer customer analytics solutions
that collect, store and interpret both their structured and unstructured data.

·        
 Integrating and recycling services to create a leaner, more
productive outcome.

Mergers
are common in the BFSI sector, but current digital disruption in the industry
means that banks must place special emphasis on delivery models that ensure
seamless integration and interoperability. 

·       
Leveraging
cross-industry experiences, economics and engineering

Digitization
is creating best practices in process, technology, tools and platforms that can
be shared across industries

 

 

Comparing
Digitization in India and USA

 

 

INDIA

USA

 
INFRASTRUCTURE

India
is building simple digital infrastructure and is gradually progressing
towards complete digitization and these small steps will help  India in skipping two generations of
financial technologies

They
are working on more complex technologies such as bitcoin and blockchain

 
 
VERIFICATION

Aadhar
has been introduced in the financial system to bring maximum number of people
into the formal system and their accounts are being linked to their aadhar
card. This is important for the verification purpose

People
here use their bitcoin accounts to link their transaction but this technology
requires massive and wasteful computing resources known as ‘mining’.This
complex infrastructure needs constant improvement also

 
SECURE PAYMENT

India
is constantly working on the Unified Payment Interface(UPI) .This allows the
user to directly transfer the money to each other

Their
technology lacks this type of secure payment verification system

 
IDENTIFICATION

Aadhar
used for identification purpose through e-KYC i.e know your customer

In
USA people use drivers licence and security numbers for this purpose but
these are not verifiable with biometrics

 
THIRD PARTY INVOLVEMENT

No
third man or party required in case of UPI payment and it takes place within
seconds. There is no overhead in UPI payments

Companies
such as Visa and American express don’t even manage the details , they only
act as intermediary between banks and customer. Merchant has the
responsibility of verifying the details of the customer

 
DIGITAL LOCKER

India
provides digital locker to the customers to store and share personal data
such as address, medical records and employment records

No
such services is provided by them

 

 

 

 

GRAPH

 

 

 

 

 

 

 

Issues
that Financial services sector faces

 

·        
Last mile connectivity

·        
Security

·        
Co-creation of viable technologies

·        
Customer Awareness

Growth in Individuals’ Savings Bank Deposits Accounts with SCBs

Population Group

Number of Individual Saving Bank Deposits Accounts
(million)

2006

2010

2015

CAGR (%)

Rural

104

167

384

15.6

Semi-urban

85

136

320

15.9

Urban

68

97

186

11.8

Metropolitan

71

100

180

10.9

All India

329

500

1,070

14.0

 

 

 

 

Year

RTGS

RETAIL  ELECTRONIC
(ECS,NEFT,IMPS)

CARDS
(DEBIT,CREDIT)

PREPAID
PAYMENT

MOBILE
BANKING

2015-16

98.4

3141.5

10,038.7

748.0

389.5

2014-15

92.8

1687.4

8424.0

314.5

171.9

2013-14

81.1

1108.3

7219.1

133.6

94.7

2012-13

68.5

694.1

6174.5

66.9

53.3

2011-12

55.1

512.4

5731.6

30.6

25.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So
digitization of financial services
is not just customer and market friendly but also gives the scope of environmental
friendly. The digitization will help in maintaining the database and records on
a digital medium which will reduce the effort of cumbersome paperwork along
with the paper too. 

 

In future, every essential information will
be available digitally and the financial services will get paperless. 

Post Author: admin

x

Hi!
I'm Dora!

Would you like to get a custom essay? How about receiving a customized one?

Check it out