Financial services companies manage, invest, exchange, or hold money for clients, including banks, insurance companies, and asset management firms. Insurance is the largest and oldest financial service, while banks offer various services and products. Foreign exchange is also a common service. Market share is not as important in this industry due to the endless niches.
A financial services business is a business or company that manages, invests, exchanges, or holds money on behalf of clients. Many types of companies can be considered to be in financial services, including banks, insurance companies, and asset management firms, among others. As money and finance become increasingly complex, there are a growing number of activities and businesses in which a financial services company can be involved.
The biggest business in the world, in terms of the amount of money that changes hands, is insurance. It is also one of the oldest companies. Insurance is considered a financial service because it protects against the loss of money or property, and because the insurance companies themselves are often heavily involved in the investment.
Premiums collected by an insurance company are not likely to have to be repaid in full. After a while, an insurance company accumulates more premium money than it has had to pay in claims, and this extra cash is known as “float.” It is not uncommon for an insurance company to invest its fleet to earn a return and thus in some way insure itself.
Banks are another very common type of financial services company. Banks provide many services and products with which we are all familiar, such as charge accounts, checking accounts, electronic funds transfers, and loans. Many other services fall within the realm of traditional or “commercial” banking. Investment banks can provide many of these same services, but they also manage their clients’ assets in large investment funds.
Foreign exchange is a type of financial service that is often performed on a small scale, often by small businesses operating out of busy airports or port cities. Many commercial banks also offer currency exchange services. These mainly consist of exchanging one currency for another at its market value, less a commission. Large-scale foreign exchange encompasses the arena in which banks buy and sell substantial amounts of foreign currencies, and is sometimes carried out by large investment funds and even by individual traders.
No financial services company has a very large market share, due to the large number of these types of companies out there. For a financial services company to have a market share of two or three percent is very significant, because most have much less. In fact, due to the endless niches that this type of company can operate in, market share is not fought for as much as in other industries.
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