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Financial Services is a neologism created by banks, insurance companies, investment banks, and brokerages, to describe the industry in which companies providing all those services are fully integrated. This term arose around and because of the US Gramm-Leach-Billey Act of the late 1990s, which allowed these companies to merge. Critics say this is a term which attempts to make the unison of these operations sound natural, ignoring the possible problems from combining them, such as monopolization.Almost every company now which previously described themselves as a bank, insurance company, or brokerage house, now describes themselves in some way as a financial services institution. Allstate Insurance , for example, now provides cds and investment brokerage services. Bank of America offers full featured brokerage products, while E-trade has expanded into offering bank accounts and loans. Companies usually have two distinct approaches to this new type of business. One approach would be a bank which simply buys an insurance company or an investment bank; keeps their original brands; and adds it to its holding company simply to diversify its earnings. Outside the United States, for example in Japan, it is also permitted to have non-financial services companies within the holding company. In this scenario, each company still looks independant, and has its own customers, etc. This is essentially the style of Citigroup and 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.
Financial Services, while as a whole industry is slow growing, is also extremely diversified, with the largest company (Citigroup), only having a 3 percent market shareMarket share in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company's sales revenue (from that market) divided by the tot. In contrast, the largest home improvement store Home DepotThe Home Depot is a home improvement retailer that aims for both the do-it-yourself consumer and the professional in home improvement construction. The company operates more than 1,500 stores across North America and claims to be the largest home improvem has a 30 percent market share, the largest coffee house StarbucksFor other meanings of the name "Starbuck," see Starbuck Leeds, England Starbucks is a giant multinational chain of coffee shops, often serving desserts, with a reputation in the US as a center for socializing and intellectual discussion, particularly amon has a 32 percent market share, etc. Even with this small market share, 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.
Biggest financial services companies
These (according to ForbesAlternate meaning: For the Boston Brahmin family associated with John Forbes Kerry, see Forbes family. Forbes magazine is an American business and financial magazine founded in 1917 by B. After his death in 1954 and his son Bruce's death in 1964, it was l magazine) are the top 25 financial services companies in the world, ranked by a balanced mixture of profitProfit is what is gained, after costs are accounted for. In accounting, this is usually measured in monetary terms. In economics, profit is most often measured differently, since costs are opportunity costs. Profit is income received by buying low and sels ( incomeIncome generally defined, is the money that is received as a result of the normal business activities of an individual or a business. For example, most individuals' income is the money they receive from their regular paychecks. In business and accounting,) revenueIn business, revenue is the amount of money that a company actually receives from its activities, mostly from sales of products and/or services to customers. To investors, revenue is less important than profit or income which is the amount of money the bus, market capitalizationMarket capitalization often abbreviated to market cap mkt. cap or market value or referred to as just capitalization is a business term that refers to the overall value of a company's stock. In essence, it is the price one must pay to buy an entire compan, and assets:
- Citigroup ( bank)
- JP Morgan Chase & Co ( bank)
- General Electric ( insurance, credit, through four subsidiaries ([1]))
- American International Group ( insurance)
- Bank of America ( bank)
- Fannie Mae (credit)
- HSBC Group ( bank)
- Toyota Motor ( credit)
- ING Group ( insurance, bank)
- Royal Bank of Scotland ( bank)
- Berkshire Hathaway ( insurance)
- BNP Paribas ( bank)
- General Motors ( credit through GMAC )
- Freddie Mac ( credit)
- UBS AG ( bank)
- Wells Fargo ( bank)
- DaimlerChrysler ( credit)
Services
