Understanding the characteristics of Financial Services

Financial services refer to economic services offered by several financial institutions that deal with money management. It is an intangible product of financial markets like an insurance, loan, credit card, stocks, etc. Financial services are products of institutions such as insurance companies, banking firms, credit unions, investment funds, consumer finance companies, and brokerage firms.

Joseph Stone Capital states that it is a key component of the financial system that facilitates financial transactions in an economy. Financial services are an important tool for economic growth as it brings together the one who needs funds and those who can supply funds. It allows people in raising their standards of livings by providing them with a facility of buying various products on hire purchase. Financial services acts as a barrier against risk arising from several unforeseen activities through insuring people against losses. These services are consumer-oriented as these are designed and offered as per the needs of customers.

Joseph Stone Capital talks about the characteristics of financial services

  • Intangibility: These services are intangible in nature. Financial institutions for selling their intangible product need to improve their brand image by improving their service quality. 
  • Customer-Specific: Financial services are customer based. These services are designed and provided to the customers by financial institutions as per their requirements. Various elements like cost, liquidity and maturity periods of these services are decided in accordance with the suitability of customers.
  • Perishable: These services are perishable in nature and cannot be store in advance of their need. Financial services are produced and supplied as and when required by peoples.
  • Concomitant: Financial services are manufactured and delivered concurrently and cannot be separated. These both functions i.e. production and supply goes at the same time.
  • Dynamic Activity: Financial services are dynamic in nature. It changes as per the varying needs of customers and the socio-economic environment. 


  • Client Oriented- These services are customized as per the requirements of peoples seeking to avail them. Financial institutions obtain all key information about customers such as amount of credit required, time period, and their source of income. After considering all needs of their clients, financial institutions decide several elements of these services like cost, liquidity and maturity period in an attempt to design them as per the customer specific requirements.
  • Funds Intermediary- Financial services act as fund intermediaries between the investors and borrowers in the market. It enables bringing together the one having an excess of funds and one who is in need of funds. Financial services provided by banking institutions like loans and credit facilities channelize the funds of depositors to borrowers generating revenue. 
  • Support Financial Transactions- Financial services support the even functioning of all financial transactions taking place in an economy. It helps people in doing transaction by offering easy access to distinct financial instruments like credit cards, debit cards, bill of exchange, cheque etc.
  • Improve living Standards- Financial services offer a facility of using high quality goods to customers by lending credit facilities. People who are not strong economically and not in a position to obtain products on cash basis, have access to credit facilities from financial institutions for buying the required products. When people use high quality goods in their daily life, their living standards would improve.