Financial services are economic services related to money management that are offered by different financial institutions. It is an intangible financial services in UAE product, similar to a loan, an insurance policy, a stock, a credit card, etc. Institutions including banks, insurance companies, investment funds, credit unions, brokerage firms, and consumer financing businesses produce financial services.
Concept of Financial Services
It is an essential part of the financial system that makes it possible for an economy to conduct financial transactions. Financial services are a crucial instrument for economic growth because they connect individuals who need money with those who can give it to them. It gives consumers the option to buy a variety of goods on a hire-purchase basis, enabling them to raise their standard of living.
By protecting consumers from financial loss, financial services serve as a barrier against risk resulting from a variety of unanticipated events. As they are created and offered in line with clients' demands, these services are customer-oriented.
Characteristics of Financial Services
- Customer-Specific
Customers are the focus of financial services. Financial organisations create and offer these services based on the demands of the consumers. Depending on the appropriateness of the consumers, several aspects of these services, such as pricing, liquidity, and maturity periods, is chosen.
- Intangibility
These are intangible types of services. Financial institutions must raise the quality of their services in order to improve their brand image while marketing their intangible products.
- Concomitant
It is impossible to separate the production and delivery of financial services. Production and supply are both in motion at the same time.
- Perishable
These services cannot be stored in advance since they are perishing in nature. When individuals need them, financial services are created and provided.
- Dynamic Activity
The nature of financial services is dynamic. It alters in response to shifting consumer demands and the socioeconomic climate.
Importance of Financial Services
- Facilitates Transactions
These services ensure proper liquidity by facilitating free movement of funds among people. Financial services enable people to easily acquire the required funds through credit cards or loan facilities.
- Ensures liquidity
These services promote the free flow of money among individuals, ensuring enough liquidity. Those who use financial services can simply obtain the necessary finances through credit cards or loan options.
- Mobilizes Savings
Another significant function of financial services is the mobilisation of people's savings. It connects together those who have extra ideal lying resources and others who need money to invest in useful resources.
- Risk Minimization
By diversification, financial services lessen the impact of risk on clients. People are protected against a variety of losses by the insurance policies provided by businesses.
- Allocates Capital Funds
It makes it possible for people to invest their money in productive sources. Financial services provide consumers a range of income-producing investment alternatives, including mutual funds, stocks, savings accounts, and fixed deposits.
- Generates Employment
Financial services contribute to a country's ability to employ more people. These services are sold by a sizable number of persons who work for financial institutions. These organizations earn money and compensate their personnel by offering financial services.
Final thoughts
All economic sectors can grow more fully thanks to these financial services in UAE. The elementary, secondary, and tertiary sectors of the economy are all adequately funded by financial services. It leads to a balanced expansion of the entire economy.