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HISTORY OF FINANCIAL SERVICES United States: Gramm-Leach-Bliley Act The term ''financial services'' became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s , which enabled different types of companies in the US financial services industry to merge. Critics of this act say the term ''financial services'' attempts to make the unison of these operations sound natural, ignoring the history of problems that have arisen from combining them, such as Conflicts Of Interest and Monopolization . Others, noting that many of the restrictions abolished by the Gramm-Leach-Bliley Act had never existed in other countries or had been abolished earlier than in the US, say the term ''financial services'' is a natural one, in long term use, which means nothing more than its constituent words.
JP Morgan Chase . In the other style, a bank would simply create its own brokerage division or insurance division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company. This is the style of Washington Mutual and Wells Fargo . BANKING SERVICES: ''WHAT DO BANKS DO?'' The primary operations of banks include:
Virtual banking Banking from home is called '' Virtual Banking '', because it allows transactions that bypass branches and ATMs; in the case of Internet banking, there is no need to contact a bank staff member. Virtual banking has changed the way people bank in many ways. In the past, people opened a bank account when they first started work and stayed with that bank for their whole lives; now, it is much easier to move an account, mortgage or loan from one banking institution to another. Many customers look at what other banks are offering and change their account if they find a better deal, so banks now have fewer loyal customers. It is common for credit card companies to entice new customers with offers such as zero per cent interest for the first six months. - COMMERCIAL BANK A '' Commercial Bank '' is what is commonly considered a 'bank'. The term ' Commercial ' is used to distinguish it from an 'investment bank', a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of Bonds (debt) or stock ( Equity ). Major commercial banks include:
Private banking The term ''private bank'' is simply a marketing term for a bank or a division of a financial services company targeted towards wealthy individuals. Often it is used to describe specifically the lending services targeted towards this group, such as large margin loans. Investment Banks '' Investment Bank s'' ( Capital Market banks) Underwrite debt and Equity , assist company deals (advisory services, underwriting and advisory fees), and restructure debt into Structured Finance products. Prominent investment banks include:
''see also: Mergers & Acquisitions '' Bank cards ''Bank cards'' include both Credit Card s and Debit Card s. Citigroup is the largest issuer of bank cards, with 150 million cards issued at the end of 2004. Issuers include Credit card machine services and networks Companies which provide credit card machine and payment networks call themselves "merchant card providers". These include: INVESTMENT SERVICES Asset Management Asset Management is the term usually given to describe companies which run Mutual Fund s. The largest are those who provide passive, ETF , or Index Fund s. Asset managers include:
Hedge Fund Managers
Custody services Custody services and securities processing is a kind of 'back-office' administration for financial services. Assets under custody in the world was estimated to $65 trillion at the end of 2004. [http://www.cm1.prusec.com/rschrpts.nsf/$/4A2ACD93260C58E785256FA3005F8D0E//PROCESSINGPRIMER25-0076.PDF Firms engaged in custody services include: INSURANCE RELATED Insurance Brokerage Insurance Broker s shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Significant companies in this sector of the financial services market include: Insurance Underwriting Personal lines insurance Underwriter s actually underwrite insurance for individuals, a service still offered primarily through agents, Insurance Broker s, and Stock Broker s. Underwriters may also offer similar commercial lines of coverage for businesses. Activities include insurance and Annuities , Life Insurance , retirement insurance, Health Insurance , and Property & Casualty Insurance . Some well known insurers include:
Reinsurance Reinsurance is insurance sold to insurers themselves, to protect them from mega catastrophic losses. Firms in this sector include: ''see also: Underwriting '' INTERMEDIATION OR ADVISORY SERVICES Stock brokers (private client services) and discount brokers Stock brokers assist people in investing, online only companies are called 'discount brokerages', companies with a branch presence are called 'full service brokerages' or 'private client services. Some of these are:
Other low-cost brokerages that function in a similar way to a Dividend Reinvestment Program include:
MARKET SHARE Financial services is the largest group of companies in the world in terms of earnings and equity market cap. It is not the largest category in terms of revenue or number of employees. Financial services, while as a whole industry is slow growing, is also extremely fragmented, with the largest company ( Citigroup ), only having a 3 % US Market Share . See page 11, "The Opportunity: Small Global Market Share", of Sanford C. Bernstein & Co. Strategic Decisions Conference - 6/02/04 for the 2003 market shares of Citigroup. In contrast, the largest home improvement store in the US, Home Depot , has a 30 % market share, and the largest coffee house Starbucks has a 32 % market share, etc. Despite this fragmentation, these companies are as a group by far the most profitable in the world, and if any grew to the same market share percentages as any other retail industry, the potential profit would be enormous. 2004 S&P 500 index market capitalization {Link without Title} in 2004:
1999 S&P 500 index (500 large American companies) market cap {Link without Title} in 1999:
BRAND EQUITY Each year, '' BusinessWeek '' publishes its 100 Best Global Brands study, ranking the Financial Value Of Brands . The following are the financial services companies in this list, ranked by this study for 2005 : GLOSSARY Glossary for reading financial services reports:
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