Financial Services Trends and Changes

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What are the key trends affecting all financial-service firms?

Service proliferation, rising competition, government deregulation and then reregulation, crisis, reform, and change, increasingly interest-sensitive mix of funds, technological change and automation, consolidation and geographic expansion, convergence, and globalization.

What is the primary goal of some banks in becoming one-stop financial-service conglomerates?

To reach out to a wider range of customers and provide a variety of services.

What is happening to banking's share of the financial marketplace?

It is decreasing.

What are the powerful forces shaping financial markets and institutions today?

Crisis, reform, and change, technological change, globalization, and consolidation. Signup and view all the answers

What are the closest and toughest competitors of banks?

Other financial-service providers, such as non-bank financial institutions. Signup and view all the answers

What are some examples of professionals who work inside financial firms?

Loan Officers, Credit Analysts, Managers of Operations, Branch Managers, Systems Analysts, Auditing and Control Personnel, Trust Department Specialists, and Tellers. Signup and view all the answers

What is driving the need for banks to adapt to changing market conditions?

The crisis, reform, and change in the financial-services industry. Signup and view all the answers

What is the significance of technological change in the financial-services industry?

It is a powerful force driving change and automation. Signup and view all the answers

What is the purpose of the joke about a bank in the introduction?

To highlight the irony that banks only lend to those who can prove they don't need it. Signup and view all the answers

What kind of services do banks provide to millions of people, businesses, and governments?

Hundreds of different services, vital to their well-being and the well-being of communities and nations. Signup and view all the answers

What is the primary source of credit for millions of individuals and families?

Banks. Signup and view all the answers

What type of loans do banks grant more than any other financial-service provider?

Installment loans to consumers. Signup and view all the answers

What is the role of banks in providing short-term working capital for businesses?

They are an important source. Signup and view all the answers

What percentage of total assets are held by U.S. banks?

About one-fifth. Signup and view all the answers

What is the growing trend in banks' lending activities?

Making long-term loans to fund new investments. Signup and view all the answers

What is the significance of banks in the financial system?

They are the principal source of credit and provide vital services to millions of people, businesses, and governments. Signup and view all the answers

What is the concern regarding the decline of banking's market share?

That traditional banking is dying. Signup and view all the answers

How do experts counter the idea that traditional banking is dying?

By arguing that banking is changing by offering new services and changing its form. Signup and view all the answers

What have the banking industry's largest customers found ways to do?

Borrow in the open market to obtain the funds they need. Signup and view all the answers

Why may traditional measures of the industry's importance no longer be accurate?

Because bankers have become more diverse and competitive in the modern world. Signup and view all the answers

What type of financial institutions are competing with banks?

Savings Associations, Credit Unions, Fringe Banks, and others. Signup and view all the answers

What are some examples of financial institutions that compete with banks?

Money Market Funds, Mutual Funds, Hedge Funds, and Security Brokers and Dealers. Signup and view all the answers

What other financial institutions compete with banks?

Investment Banks, Finance Companies, Financial Holding Companies, and Life and Property/Casualty Insurance Companies. Signup and view all the answers

Why is it important to recognize the changing nature of the banking industry?

Because it has implications for the industry's future and competitiveness. Signup and view all the answers

What services have banks offered for centuries?

Carrying out currency exchange, discounting commercial notes and making business loans, offering savings deposits, safekeeping of valuables and certification of value, supporting government activities with credit, and offering checking accounts. Signup and view all the answers

What is one of the financial services that banks began offering in the past century?

Granting consumer loans Signup and view all the answers

What is one of the investment products offered by banks and their financial-service competitors?

Mutual Funds Signup and view all the answers

What is one of the services that banks offer to support businesses?

Offering equipment leasing Signup and view all the answers

What is one of the ways that banks support government activities?

With credit Signup and view all the answers

What is one of the services that banks offer to individuals and families?

Savings deposits Signup and view all the answers

What is one of the risk management services offered by banks?

Hedging services Signup and view all the answers

What percentage of assets in the financial system are held by banks in other nations?

Half or more Signup and view all the answers

What is one of the services that banks offer to support international trade?

Carrying out currency exchange Signup and view all the answers

What are the three ways to define a bank?

The economic functions it performs, the services it offers its customers, and the legal basis for its existence Signup and view all the answers

What have bank service menus expanded to include?

Investment banking, insurance protection, financial planning, advice for merging companies, and risk-management services Signup and view all the answers

What type of banks are industry leaders and offer a wide range of financial services?

Money-center banks Signup and view all the answers

What type of banks serve local communities and offer personalized services?

Community banks Signup and view all the answers

What do money-center banks do to expand their business?

Acquire smaller businesses Signup and view all the answers

What type of competition do money-center banks face?

Tough global competition Signup and view all the answers

What is a key difference between money-center banks and community banks?

Their size and scope of services Signup and view all the answers

Study Notes

Key Trends Affecting All Financial-Service Firms

Service proliferation is a key trend affecting financial-service firms
Rising competition is another trend affecting financial-service firms
Government deregulation and then reregulation are key trends affecting financial-service firms
Crisis, reform, and change in banking and financial services are significant trends
An increasingly interest-sensitive mix of funds is a trend affecting financial-service firms
Technological change and automation are key trends affecting financial-service firms
Consolidation and geographic expansion are trends affecting financial-service firms
Convergence and globalization are also key trends affecting financial-service firms

Career Opportunities in Banking and Financial Services

Various professionals work inside financial firms, including: • Loan Officers • Credit Analysts • Managers of Operations • Branch Managers • Systems Analysts • Auditing and Control Personnel • Trust Department Specialists • Tellers

Overview of the Changing Financial-Services Sector

The financial-services sector is undergoing significant changes
Powerful forces are reshaping the industry
The financial system and competing financial-service institutions are evolving
Old and new services are being offered to the public
Key trends are affecting all financial-service firms

What Is a Bank?

A bank can be defined in terms of its economic functions, services offered, and legal basis
Banks provide hundreds of services to millions of people, businesses, and governments worldwide
Banks are the principal source of credit for individuals, families, and governments
Banks hold a significant portion of total assets in the financial system

The Financial System and Competing Financial-Service Institutions

Banks face competition from various financial institutions, including: • Savings Associations • Credit Unions • Fringe Banks • Money Market Funds • Mutual Funds • Hedge Funds • Security Brokers and Dealers • Investment Banks • Finance Companies • Financial Holding Companies • Life and Property/Casualty Insurance Companies

Services Banks and Their Closest Competitors Offer the Public

Banks have offered traditional services for centuries, including: • Currency exchange • Discounting commercial notes and making business loans • Offering savings deposits • Safekeeping of valuables and certification of value • Supporting government activities with credit • Offering checking accounts • Offering trust services
Banks and their competitors have begun offering new services in the past century, including: • Granting consumer loans • Financial advising • Managing cash • Offering equipment leasing • Making venture capital loans • Selling insurance policies • Selling and managing retirement plans • Dealing in securities • Offering mutual funds, annuities, and other investment products • Offering merchant banking services • Offering risk management and hedging services

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Description

This quiz covers key trends affecting financial-service firms, including crisis, reform, and changes in banking and financial services. Topics include service proliferation, rising competition, government deregulation, and technological change.