Functions of Financial Services

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Financial services are the economic services provided by financial institutions, such as banks, credit card companies, insurance firms, accountancy firms and stock brokerages. These companies manage money and provide a range of products and services, including savings accounts, checking accounts, and loans.

The Functions of Financial Services

Orderly development of an economy depends to a large extent, on the range and the quality of the financial services extended by the financial intermediaries. Specifically, the following functions are performed by financial services:

Mobilization of funds: A financial service helps in mobilizing funds from investors, individual, institutions and corporate entities through different financial instruments like equity shares, bonds, mutual funds etc. Participating in money market instruments like commercial papers, certificates of deposits, treasury bills, discounting of bills, equipment leasing, hire purchase, venture capital, seed capital, and financing the business of various small and medium scale enterprises (SME).

Reliability: The financial services industry is highly dependable on its customers as they are directly involved in its functioning and have to be provided with timely information. As a result, it has to ensure that the demand for its products and services are constantly synchronized with the supply, so that they remain available when needed by the customer.

Advisory: The financial services industry is an advisory based one, and the advisory function is dominant in this sector. Advising clients about the availability of different financial products, providing them with unbiased advice and helping them make informed decisions is the primary activity undertaken by a financial service company.