What are the characteristics of Financial services? Some of the characteristics of Financial services include its Intangible nature, the human factor involved, and its influence on other industries. This article will focus on a few of these characteristics. The article will also discuss the growth of the industry. The key features of Financial services include:
Intangible in nature
The term ‘financial services’ describes the economic services that are provided by institutions in the financial industry. They include insurance companies, banking firms, investment funds, credit unions, and other similar organizations. These services are intangible and, therefore, cannot be stored, but must be provided according to customer requirements. To gain credibility, financial services must be of a high quality. For this reason, the firm should focus on improving its brand image.
Marketing efforts focusing on intangible products often have a special attention to customer retention, as customers are rarely aware of a good service when they receive it. Examples of intangible products are banking services, cleaning services, freight hauling, energy management, telephones, and the like. Many of these services are intangible in nature, but the value they provide is tangible. A good service will attract customers who can’t store or transport it.
Involvement of human element
The Human Element is a proven training method. Based on the FIRO theory, this approach uses an interactive model that provides opportunities for immediate feedback and practice. The Human Element methodology combines experiential learning with scientific learning methods to produce lasting changes in behavior. The method can be customized to address specific issues. It is also backed by rigorous scientific research. Here are three examples of applications of The Human Element:
Fintech is a growing force in the financial services industry. However, if we want to improve the human element, we must change how we do business. As more people use fintech services, we must focus on training our employees to be technology-enabled. We must remember that a robot cannot do the job of a human. Robots have no “je ne sais quoi,” while we need dynamic lateral thinking.
Influence on other industries
The financial services industry has a significant impact on other industries, including the manufacturing and retail industries. Its focus is on the use of new technologies, digitization and operational efficiencies, as well as speed-to-market and superior customer experiences. The industry is making significant investments in digital channels and self-service capabilities, while simultaneously cutting its expenditure on branches and focusing on mobile banking and other self-service methods. Digital wearable devices are making targeted services possible, as are new payment systems.
In the future, the financial services industry will be significantly different than it was in the past. The industry will be heavily dependent on information technologies, with many small financial service providers gaining access to these services. Although relatively few firms will provide nationwide services, the existence of small, specialized companies will prevent a handful of firms from dominating the industry. In addition, technology will allow smaller firms to compete more effectively with large companies. If these new technologies and services continue to improve, the financial services industry will continue to evolve in a positive way.
Growth of industry
The financial services industry is undergoing a radical value shift. Instead of growing slowly by providing capital-intensive risk intermediation services, the industry is seeing rapid growth by introducing capital-light services that are tied to connected data and value technology. A decade ago, the financial services industry was segmented into global, regional and local banks, asset managers and insurance companies. Today, the divisions are more telling. Fintech and big tech companies are picking up capital-light technologies. Moreover, incumbents are restricted to risk intermediation services.
The global financial services industry represents around 20% of the world’s GDP, and has a major impact on economic growth. However, the situation in 2021 may be challenging for financial services companies as debt defaults and ultra-low interest rates have impacted the sector. But most markets are expected to start recovering after 2021. In developed markets, established financial services companies dominate the industry, while fintech firms are gaining prominence in developing markets. As the adoption of digital public goods, such as digital currencies, increases, financial services companies will need to compete with emerging fintech firms.