American Financial General Service

Financial Services

The American financial general service industry is mainly constituted of the following:

  • Organizations or persons, which works as agents or brokers (except securities brokerages and commodity contracts brokerages) in buying and selling financial contracts and
  • Organizations or persons providing financial investment activities (except securities and commodity exchanges, portfolio management, and investment advice). These can be said to compose of including loans, retail financing, and other credit related products.

According to IBISWorld, this industry consists of establishments, which are primarily engaged in providing one or more of the following: financial transactions processing (except central banks); reserve and liquidity services (except central banks); and check or other financial instrument clearinghouse services (except central banks). Different industry participants are involved in the transfer of funds between payer and payee. These transfers are physical and electronic check processing, electronic fund transfers through automated clearing companies or websites, and various debit and credit card payments.

Various operators function in the US financial services market, which provide general services mentioned above. However, their functioning in the market depends on the following factors (list is not exhaustive):

  • industry revenue
  • industry gross product
  • employment
  • establishments
  • exports and imports
  • domestic demand and
  • total wages
  • products and service segmentation
  • major market segments
  • industry concentration and
  • geographic spread

When a player is entering the US general financial services market, several factors should be considered with respect to taxation, technology, cost, and globalization. Various barriers prevent a new company from entering this industry and also give an indication of the extent to which this occurs. The taxation details give an insight into all kinds of taxation that are levied on specific commodities, along with various tax rebates. A new entrant in the US general financial services market should also keep a check on the following parameters:

  • Industry Assistance, which refers to any particular leverage or assistance provided by any government policy and/or other measures designed to improve the performance of this financial services industry
  • Regulation and Deregulation section that provides any regulation and/or deregulation to this industry, which can be applied
  • Cost Structure section, which correlates to the average costs for a company operating in this industry as a percentage of total revenue
  • Trends or directions developed as a result of technological advancements, which acknowledge the latest technology and/or systems available to this general financial services industry within the US.
  • Industry Volatility, which pertains to the year on year fluctuations, which occur in industry output
  • Globalization factor should also be kept in mind as this gives an indication of the extent to which the industry is global based on factors such as the level of foreign ownership and the proportion of demand accounted for by foreign operators, etc.

IBISWorld circulates an Industry Risk Ratings report, which analyzes the inherent risks associated with the Financial Transactions Processing, Reserve and Clearinghouse Activities in the US industry.

The report looks at different operational risks associated with the American general financial service industry. Three types of risks that are recognized in the analysis are listed below:

  • risk that arise from within the industry itself (structural risk),
  • risks that arise from the expected future performance of the industry (growth risk) and
  • risk that arise from various forces, which are external to the industry (external sensitivity risk)

Structural Risk: The Structural Risk defines the risk arising from within the industry itself and is based on seven key indicators. These key indicators, as defined in the report, are listed below:

  • Barriers to entry of a new player in the industry
  • Competition within the industry
  • Industry exports
  • Industry imports
  • Level of assistance by government
  • Life cycle stage and
  • Volatility of general finance industry

The Overall Structural Risk Score in the report is defined as a weighted aggregation of these seven key indicators.

Growth Risk: The Growth Risk pertains to risks arising from the expected future performance of the industry. Mixing and analysis of the scores for Recent Industry Growth and Forecast Industry Growth, results in the Overall Growth Risk Score.

Sensitivity Risk: Different variations of risks arising from forces (sensitivities) external to the general financial industry, is referred to as the Sensitivity Risk. Exchange Rates, Interest Rates, Commodity Prices, and Government Regulations could be cited as various examples of external sensitivities.

Some Players in the American Financial General Services Market

American International Group, Inc. (AIG): American International Group, Inc. (AIG), which is one of the leading operators in the insurance and financial services industry, could be perceived as one of the global leaders in this industry. This group also has insurance and financial operations in more than 130 countries worldwide. The companies of this group serve a variety of commercial, institutional, and individual customers through the most extensive and latest worldwide property-casualty and life insurance networks of any insurer. AIG companies also operate in the fields of retirement services, financial services, and asset management around the world.

American General Financial Services (AGFS): This company is a member of American International Group, Inc. and deals in different fields of providing loans, retail financing, and other credit related products. Their customer base touches more than two million families in 45 states, Puerto Rico and the U.S. Virgin Islands. AGFS focuses in the following fields:

  • Consumer lending (secured and unsecured)
  • Mortgages (1st and 2nd mortgages)
  • Home equity lines of credit
  • Retail sales financing
  • Credit insurance