Management and

development of Financial
services, sales and service
outlets
In Western and Emerging economies
Group 2
Aleena Reji, Akshay S, Alfiyas K.P ,
Albin Sunny, Ajay Joseph
Content
Development of financial services
01
Types Of Financial Services
02
Sales Of Financial Services
03
Financial service outlets
04
Financial Services
Overview
The financial services industry manages money for individuals and corporations. It comprises such
organisations as commercial and investment banks, insurance companies, hedge funds, credit-card
companies, consumer finance firms, accounting agencies, and brokerage firms. The industry’s services
are mainly related to banking and insurance services, asset management, investments, foreign exchange,
and accounting.

Financial services form the lifeblood of economic growth and development. They facilitate the setting up of
big and small businesses and the expansion of businesses. Employment and entrepreneurship created
with the help of the services enable people to earn and save.

Financial services show the poor ways out of poverty and of leading better lives. To the wealthy, financial
services offers opportunities to make money grow.

The financial services industry is the largest-earning sector in the world. Through interventions in industry
and agriculture and other formal sectors, they provide lines of credit and investment.

However, financial services have largely eluded the poor and small and micro units, and there is great
potential to extend the services to the informal sector, too. Perhaps, the future of the financial sector lies
here.
Development of
financial services
In US
Until the 1970s, the financial services industry in the United States consisted of a few broad segments such as
banks and savings/loan agencies that catered to individuals and companies and brokerage firms that assisted
in making investments in stocks and bonds.
However, during that decade, federal regulations curbing the activities of banks in mutual funds, insurance,
and stocks made banks less profitable. The oil embargo and the steep increase in oil prices ordered by the
Organization of Petroleum Exporting Countries (OPEC) — the “oil shock” — caused a staggering rise in
inflation that made the interest rate on bank deposits unattractive.
Soon, companies that offered higher returns from mutual funds that they invested in safe government
securities began sprouting, severely affecting banks.
However, banks rose from the ashes, making full use of gaps in Glass-Steagal Banking Act of 1933, which
had originally restricted their functions. They began to offer more services; they sold mutual fund products,
established loan subsidiaries, and set up automatic teller machines. These steps brought them unprecedented
profits by 1993.
The convergence of organisations offering financial products and services continued. Perhaps, a most
important event was the setting up of Citigroup with the merger of Citicorp and Travelers Insurance.
Other mega mergers followed, breaking the compartmentalisation of the financial services sector. Today,
many banks offer products much beyond their traditional portfolios and many financial enterprises offer
conventional banking services.
Despite its almost permanent sheen, the financial services industry has had to face many crises.
Among the more recent ones are Black Monday (October 19, 1987), when the New York Stock Exchange
experienced its biggest single-day loss in history, losing nearly 26 percent of its value; the dot-com bubble of
2000; and the subprime mortgage (housing bubble) crisis of 2007-2009.
The Gramm-Leach-Bliley Act passed in the US in 1999 allowed financial services companies to engage in
multi-segment transactions, but brought in stringent regulations for protecting the customer and ensuring
solvency.
But the industry came under strict government scrutiny following the collapse of the Enron Corporation in
2004 and accusations of fraud against top executives of JP Morgan Chase and Merrill Lynch and the
bankruptcy of the financial services firm Lehman Brothers.
While fraud and greed on the part of financial sector head-honchos and poor policy implementation by
national governments now threaten to derail the financial services industry, new technology has brought it a
global, 24/7 reach.
This has made the industry more customer-oriented and led to greater competition; but regulatory measures
will have to become fool proof for it to thrive once again.
In Europe
The financial services industry in Europe, in the face of economic crises, continues to provide the means
to finance infrastructure development and business expansion and make available saving and investment
options to individuals.

According to a research report by the City of London, Europe’s financial services industry accounts for
nearly 6 percent of the continent’s GVA (gross value added), or €731 billion, gives employment to 6.4
million people, and contributes €209 billion in taxes.

Nineteen of the European Union’s 28 countries share the euro and make up the Eurozone. Apart from a
common currency, these nations have free-trade pacts, besides labour and capital agreements that allow
the free movement of these resources.

The European Central Bank decides the monetary policy of the Eurozone, whose main job is to check
inflation. Political decisions related to the Eurozone and the euro are under the purview of the
Eurogroup.
The global economic crises since 2000 have deeply affected the financial services sector in
Europe, too. Following the international financial crisis of 2008, public funds were used
generously to bail out banks and other financial institutions.

This has led to the decline in public finances and calls for a more robust financial system and
more transparent financial markets. The latest turbulence to hit the European finances
services industry is the debt crisis, caused by mismanagement of public finances and
overspending by governments.

In order to stabilise the financial market and the financial services industry, the European
Commission has put forward more than 40 regulatory reform measures. Efforts to fully
develop a European banking union that would preserve the single market for financial
services are on the cards.
In India
• The financial services sector in India, which accounts for 6 percent of the nation’s GDP, is
growing rapidly. Although the sector consists of commercial banks, development finance
institutions, nonbanking financial companies, insurance companies, cooperatives, mutual
funds, and the new “payment banks,” it is dominated by banks, which holds over 60 percent
share.

• The Reserve Bank of India (RBI) is the apex bank of the country, controlling all activities in
the financial sector. Commercial banks include public sector and private sector banks and are
under the regulatory supervision of the RBI. Development finance institutions include
industrial and agriculture banks.

• Non-banking finance companies (NBFC) provide loans, purchase stocks and debentures, and
offer leasing, hire purchase, and insurance services.

• Insurance companies function in both public and private sectors and are controlled by the
Insurance Regulatory and Development Authority (IRDA).
• India has a vibrant capital market with stocks exchanges controlled by the Securities and
Exchange Board of India (SEBI).

According to “India in Business,” a website of the Union Government, India’s banking sector assets
were worth $1.8 trillion in the 2014-15 financial year.

According to a report by KPMG-CII, India’s banking sector is on the way to becoming the fifth
largest in the world by 2020. The country’s life insurance sector is the biggest in the world, and the
market size is expected to touch about $400 billion by 2020.
The assets of the mutual fund industry are worth $190 billion. The pension corpus fund is projected
to record $1 trillion by 2025. Reforms to put the financial services industry and the economy on the
fast track include measures to make finance available to medium, small, and micro industries.
India once had a heavily government-dominated financial services industry, and most services were
provided by nationalised banks. Financial sector reforms were initiated in 1991 with the aim of
accelerating economic growth.
In the following years, industry and service sectors were opened up for foreign direct investment. The
reforms ended the dominance of the public sector and reduced direct government control on industrial
investments.

Financial sector reforms in India have improved resource mobilisations and allocation. The liberalisation
of interest rates and the easing of cash reserve norms have helped make funds available to various
sectors.

However, prudential norms have been tightened and transparency and regulation increased to avoid a
systemic collapse that other countries have suffered.
Financial services in rest of Asia
Asia, particularly the eastern region, faced a severe setback with the 1997-98
financial crisis that started with the collapse of the Thai baht and Thailand’s near
bankruptcy.

However, the Asian financial sector, particularly banks, has lived to see better days.
The middle-income nations in the region have been able to strengthen their stock
markets and their nonbanking financial sector.

However, the financial services sector in the region is lagging way behind that in the
US and Europe. But the potential to develop is huge and the sector is developing
rapidly.

Along with opportunities for development, the sector also faces threats to stability.
Reforms and regulatory measures have to be quickly initiated.
Financial
Services
Types Fund Based

Fee based
Fund Based
 Underwriting
 Dealing in secondary market activities
 Participating in money market instruments like
CPs, CDs etc.
 Equipment leasing or lease financing
 Hire purchase
 Venture capital
 Bill discounting.
 Insurance services
 Factoring
 Forfeiting
 Housing finance
 Mutual fund
Fee Based
 Securitisation
 Merchant banking
 Credit rating
 Loan syndication
 Business opportunity related services
 Project advisory services
 Services to foreign companies and NRIs.
 Portfolio management
 Merger and acquisition
 Capital restructuring
SALES OF FINANCIAL
SERVICES IN WESTERN AND
EMERGING ECONOMIES
 FINANCIAL
SERVICES
Financial services are the economic services provided by
the finance industry, which encompasses a broad range
of businesses that manage money, including credit
unions, banks, credit companies, insurance companies, accoun
tancy companies, consumer-finance companies, stock
brokerages, investment funds, individual asset managers, and
some government-sponsored enterprises.

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SALES OF FINANCIAL SERVICES
Sales of financial services refer to the revenue generated by the sale of
financial products and services such as banking, insurance, investment
management and mortgage services.

Financial services companies aim to generate profits by providing these

services to customers, who may include individuals, businesses and
organisations.

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SALES OF FINANCIAL SERVICES
These institutions help to market, distribute, and provide support for financial
products to customers. They also offer various platforms and tools to help customers
invest in financial products, such as online trading platforms, mobile apps, and
investment advice.

Additionally, these institutions employ financial advisors and other professionals who
are trained to help customers make informed investment decisions. The expertise
and services offered by these institutions play a key role in increasing sales of
financial products and helping customers reach their financial goals.

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 SALES OF FINANCIAL SERVICES IN WESTERN AND
EMERGING ECONOMIES

The sales of financial services vary between western and emerging economies, with several factors
contributing to the differences.

• Western economies, such as the United States and Europe, generally have more mature and
developed financial systems, with a larger number of financial institutions offering a wide range of
products and services.
• Emerging economies, such as China, India, Brazil, and others, are still developing their financial
systems and offer fewer financial services, with fewer financial institutions.
• However, these emerging economies are growing rapidly. In recent years, many western financial
institutions have also expanded their operations into emerging economies, taking advantage of
the growth opportunities in these markets.
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Institutions engaged in sale of financial services in Western
and emerging economies

The following financial institutions play a crucial role in helping to drive sales of financial
products;

• Banks
• Insurance companies,
• Mutual funds
• Brokerage firms
• Credit unions
• Pension funds
• Hedge funds,

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BANKS

The various financial services sold or offered by Commercial banks, investment banks, and savings banks
are; Deposits, Loans, Mortgages, Credit cards, Internet banking etc. Banks sell their services through.

• Branches - Banks have physical branches where customers can walk in to access services, such as
opening a deposit account, applying for a loan, or getting investment advice.

• Online banking - Banks offer online banking platforms that allow customers to access services, such as
making deposits, paying bills, and transferring funds, from their computer or mobile device.

• Telebanking - Banks offer telephone banking services that allow customers to access services, such as
checking account balances and making transactions, over the phone.

• Advertising

• Financial advisors - Banks often employ financial advisors who provide investment advice and help
customers select financial products that meet their needs.

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INSURANCE COMPANIES

The various services offered by insurance companies are in the form of the various life insurance policies
like Life insurance, Health insurance, Property insurance etc.

• Agents and brokers - Insurance agents and brokers are intermediaries who sell insurance policies on
behalf of insurance companies.

• Direct marketing - Insurance companies sell policies directly to customers through their own websites,
call centers, and direct mail campaigns.

• Advertising

• Employee benefits programs - Insurance companies may offer group insurance policies through
employers as part of their employee benefits programs.

• Sales incentives - Insurance companies may offer sales incentives, such as bonuses or commissions, to
agents and brokers to encourage them to sell their products.

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MUTUAL FUNDS

The Mutual funds are investment companies that pool money from multiple investors to purchase a
portfolio of stocks, bonds, or other securities. Mutual funds sell their products with the help of;

• Financial advisors - Financial advisors often sell mutual funds to their clients as part of their
investment portfolios. They provide advice on which funds to buy and sell, and they assist with the
transaction process.

• Broker-dealers - Broker-dealers, such as full-service brokers and discount brokers, sell mutual funds
to their clients. They typically provide research and analysis on different funds, and they assist with
the transaction process.

• Direct marketing channels - Mutual funds also sell their products through their own websites, call
centers, and direct mail campaigns.

• Advertising

• Sales incentives - Some mutual funds offer sales incentives, such as bonuses or commissions, to
financial advisors and broker-dealers to encourage them to sell their products.
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BROKERAGE FIRMS

Brokerage firms, also known as stockbrokers, help individuals buy and sell securities, such as stocks, bonds, and
options. The firm acts as a middleman between buyers and sellers and provides a trading platform for
everyone. It charges a commission on these transactions. Every time an investor buys a stock, a transaction fee
is charged. Brokerage firms sell their services through;

• Financial advisors - Financial advisors working at brokerage firms often sell securities, such as stocks, bonds,
and options, to their clients as part of their investment portfolios. They provide advice on which securities to
buy and sell, and assist with the transaction process.

• Online trading platforms - Brokerage firms offer online trading platforms that allow customers to buy and
sell securities directly, without the assistance of a financial advisor.

• Direct marketing - Brokerage firms sell securities directly to customers through their own websites, call
centers, and direct mail campaigns. This allows customers to purchase securities without the assistance of a
financial advisor.

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CREDIT UNIONS

A credit union is a nonprofit financial institution that’s owned by the people who use its financial
products. Credit union members can access the same kinds of products and services as offered by a
traditional bank, such as credit cards, checking and savings accounts and loans. Members elect a board
of directors to manage the credit union to ensure that their best interests are represented.

Credit unions charge interest and account fees, but they reinvest those profits back into the products it
offers, whereas banks give these profits to its shareholders. Credit unions sell their services through;

• Credit Union branches

• Employee benefits programs - Credit unions may offer financial products and services, such as payroll
deduction loans, through employers as part of their employee benefits programs.

• Advertising and online services

• Member initiatives and benefits

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PENSION FUNDS

A pension fund is a type of investment vehicle that pools together the savings of individuals to provide
a source of income in retirement. Pension funds are typically managed by professional investment
managers and invest in a diversified portfolio of assets, such as stocks, bonds, and real estate. The goal
of a pension fund is to generate sufficient returns to pay out benefits to its members when they retire.

Pension funds are more common in western economies and sell their services mainly using;

• Employer-sponsored plans - Pension funds sell their services to employers, who then offer the plan
to their employees as part of their benefits package.

• Direct to consumer plans - Pension funds may also offer their services directly to consumers, either
through their own website or through financial advisors.

• Government-sponsored plans - Some governments sponsor pension funds that are available to
their citizens.

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HEDGE FUNDS

Hedge funds pool money from investors and invest in securities or other types of investments with the
goal of getting positive returns. Hedge funds are not regulated as heavily as mutual funds and generally
pursue investments and strategies that may increase the risk of investment losses. Hedge funds are
limited to wealthier investors who can afford the higher fees and risks of hedge fund investing, and
institutional investors, including pension funds.

Hedge funds are also more common in western economies and sell their services through;

• Direct to investor - Hedge funds may sell their services directly to investors, either through their own
website or through financial advisors.

• Private placement - Hedge funds may sell their services through a private placement, where they
offer shares in the fund to a limited number of investors.

• Fund of funds - Hedge funds may sell their services through a fund of funds, which is a type of
investment vehicle that invests in a diversified portfolio of hedge funds.

• Networking and referral - Hedge funds may sell their services through their networks and referrals
from existing investors, financial advisors, and other intermediaries 33
Financial Services
Service outlets

Service outlets means the Finserve Agents spread

throughout the Territory through which the Finserve
Services are marketed, distributed and sold and whose
agents have the responsibility of assisting the Customers
in subscribing for the FinServ Services, SIM Card
registration, activation and account linkage where
applicable
Banking Service Outlet

 Banking Outlet: A physical place where clients can access a financial service.
The following can all be considered banking outlets: a bank branch, an ATM,
a banking agent (such as a gas station or post office that provides financial services), a
retail store with in-store banking, a mobile phone, a website (in the case of e-
banking), or a point of sale (POS) device (these are portable devices with antennas or
connected to tellers that function as a sort of ATM).
The existence of convenient and easily accessible banking outlets is a significant part
of expanding financial inclusion. Banks have also established agency
arrangements with non-bank outlets (e.g., postal offices, gas stations,
groceries) for the promotion of branchless banking. The growth of Mobile
Network Operators that facilitate branchless banking has also blurred the
traditional distinction between banks and NBIs.
Development in service

As the pandemic reset customer expectations, field service management and its
relationship to customers also changed. These changes created new trends for the future
of field service management, including more self-service, contactless service and
adoption of more advanced technologies. Some of the trends are;

1. Contactless field service and support

COVID-19 evolved customer and field interactions, and many customers are less
interested in returning to the service standards from before the pandemic. Many
organizations also added safety protocols -- like contactless capabilities -- to keep
employees and customers safe amid the pandemic.

2. Use of cashless and mobile payments

Amid the pandemic, fewer customers have used cash due to health concerns and
restrictions. Use of currency decreased within B2B transactions, while digital payments
increased. Mobile payments offer customers more convenience and safety than cash or
physical cards.
3. Increased use of self-service
Self-service portals offer an initial point of contact between a customer and an
organization and capture details about the customer's problem. These details tell field
service teams what to expect and where to resolve the customer issue.

4. Use of advanced technologies

Across healthcare and manufacturing industries, organizations heavily invest in IoT and
AI. These technologies can also benefit the future of field service management.

5.Cloud-based software to enable remote work

Before COVID-19, few to no field service workers thought something would prevent
them from working in a customer's home. Yet, organizations worldwide suddenly closed
their doors while learning how to run their businesses from somewhere other than their
offices.
Management of service outlets

The Indian service industry has emerged as one of the largest and fastest-growing sectors on
the global landscape with India ranked 9 th in overall GDP and 10th in services GDP. During
the past two decades, financial markets around the world have become increasingly
interconnected. Financial globalization has brought considerable benefits to national
economies and to investors and savers
x Economic Liberalization, market orientation, changing the role of women, export potential,
service tax etc are some of the reasons for the growth of India’ Service Sector
x Indian Service Sector shaping the business through retail sector which accounts for 14-15
per cent of the gross domestic product and the implication of FDI to different stakeholders.
x India’s Service Sector through retail business generates employment, literacy opportunities,
rise in income level, increase in standard of living etc.
x Future prospects of Retail service sector in relation with organized sector, unorganized sector
and rural retailing.
Management of service outlets in India

 Financial services covers a wide range of activities and they can be broadly
classified into traditional activities and modern activities. In the changed
economic scenario, many financial intermediaries have started expanding their
activities in the financial services sector by offering a variety of new products. The
financial service sector has thus emerged as the fastest growing sunrise industry.
 With the opening of the economy to multinationals and the exposure of Indian
companies to international competition, much importance is given to foreign
portfolio flows. It involves the utilization of multi currency transactions which
exposes the client to exchange rate risk, interest rate risk and economic and
political risk. Unless a proper risk management system is developed by the
financial intermediaries as in the West, they would not be in a position to fulfil the
growing requirements of their customers. Hence, it is absolutely essential that
they should introduce Futures, Options, Swaps and other derivative products which
are necessary for an efficient risk management system.
Emerging market and developing
economies (Western)
 Emerging market and developing economies (EMDEs) comprise a large and
diverse group whose financial systems have grown in importance over the last
decade. Based on the classification of countries used by the IMF in its World
Economic Outlook (WEO), 150 economies are classified as EMDEs, including 10
members of the G20. They differ substantially in terms of economic size,
level of development, legal and institutional frameworks, and other factors
that affect financial systems. Over the last 10 years, financial systems in
EMDEs have grown significantly vis-à-vis those in advanced economies (AEs).
key financial stability issues in EMDE’s

 1. Application of international financial standard

 2. Promoting cross-border supervisory cooperation
 3. Expanding the regulatory and supervisory perimeter
 4. Management of foreign exchange risks
 5. Developing domestic capital markets
challenges

 1. Lack of qualified personnel in the financial service sector.

 2. Lack of investor awareness about the various financial services.
 3. Lack of transparency in the disclosure requirements and accounting
practices relating to financial services.
 4. Lack of specialisation in different financial services (specialisation only in
one or two services).
 5. Lack of adequate data to take financial service related decisions.
 6. Lack of efficient risk management system in the financial service sector.