Investment products of banks

Investment products of banks are quite a new opportunity offered by financial organizations of different levels. Their essence is quite extensive, because there are many options for working with investments, but the role of the bank in most cases is approximately the same - mediation. He himself will relatively rarely risk his own money, preferring to use the money of clients and for this giving them a part of the income they receive.

Features and causes of appearance

The need for such an instrument as investment products arose relatively recently. Until then, banks were quite successful in making profits by taking loans at a low interest and then giving them to their own customers at a higher rate. In addition, these organizations also actively used their own funds, because the rate on the deposit is always less than on the loan. However, gradually the situation on the market stabilized, and now on this difference, if you can make money, then only relatively small, by the standards of banks, money. As a result, financial institutions began to look for alternative livelihood opportunities and came to the conclusion that selling investment products is the most profitable method that allows you to earn money and carry out further activities.

Investment banking products and services

Not all banks provide at least some of the possible services, of which there are many varieties. For example, most often the investment products of a financial institution consist exclusively of trust management services. That is, the bank simply takes the client's money and, with his consent, starts using them on the stock exchange.

Typically, the organization gives preference to not too profitable, but reliable projects that are likely to consistently bring a certain income. This approach allows you to pay in time and in full volume with the client, and he, in turn, will risk less his own money. However, this is not the only way to work with this financial instrument. The bank can also accept securities, which will subsequently be placed on the stock exchange and disposed of at their own discretion, but with the consent of the owner. Also, a financial institution can simply provide services for the purchase or sale of those same securities at the request of customers. Above all, the bank can issue securities, issue loans for investment activities and so on.

Implementing and creating a product

That the financial structure has the opportunity to use investment products in its activities to generate income, it must first meet certain requirements. So, the very first stage is getting a state license. Without this important document, any such activity can not be considered legitimate, and the client ideally should immediately verify the availability of this paper and require its presentation. Most banks do this without a reminder, posting such licenses for a general review. It is not very easy to get a document, and it is also necessary to prove that in the process of working with investments the organization will not burn, it will be able to profit and so on.

The next stage is the bank's exit to the international trading platform. In some cases, it must also provide access to it for its own customers, but this is not always the case. It can not be said that this is a difficult stage, because such areas are interested in a constant increase in the number of players, but some effort will still have to be made.

After all this is done, you need to hire or train professionals who know how to work in this direction and make a profit. Otherwise, instead of the expected revenues, there will be solid expenses, and for the bank this is practically fatal.

As a consequence of this requirement, it becomes necessary to create a certain structure in an organization that will deal with financial investments, on the one hand, and provide investment products to potential customers, on the other. As a rule, such structures are divided into at least two branches, but these are the features of the activity of each individual bank.

The last stage is the technical side of the issue. The bank can be registered in the system, get all the required licenses, hire great specialists and attract a huge mass of customers to service, but if these same specialists do not physically have the opportunity to work with trading platforms, all of the above actions will be meaningless.

Possible problems

As with any activity, there are certain problems in investing. So, it is more risky in comparison with classical systems of income generation, there are a lot of legislative restrictions, as well as strict control by the Central Bank. The latter can simply prohibit the most profitable (but also risky) transactions, as this will disrupt the overall stability of the country's financial system.

Investment loan products

This is another option for a banking-type financial institution, which is often offered to legal entities. The essence of it is that the bank acts as an intermediary between the client and the investee, issuing the first loan, and at the same time making investments. A fairly risky system, however, with luck and / or accurate calculation, it allows a legal entity to quickly repay the debt, the object of investment - to get the required amount, and the bank - its part of the profit. In general, usually all parties are satisfied with the deal, if it was successful and no problems arose.

Benefits

The advantages that new investment products provide are quite numerous. The first of these can be considered the size of the profit. It is clear that the bank receives, as a rule, more revenue than the client himself. But he also carries risks on his own (at least in most cases). The second advantage is the help of specialists. Theoretically, any person can independently become a player on the stock exchange and make investments at his own discretion. However, in fact, such an approach will most often lead to the fact that a person or a legal entity will simply lose money if they do not use the services of specially trained employees.

disadvantages

Naturally, there are always drawbacks. So, investment products still remain not only the most profitable financial instrument of all, but also the most dangerous in terms of possible risks. Most often, the bank still returns the customer the amount that he put, but you can not wait for the profit. Moreover, in some cases, when the situation with the income of the organization is very complicated, it is possible to wait for a long time to return the money.

Results

In general, considering all of the above, it can be concluded that investments are profitable investments, but only under condition of availability of guarantees for income and general reasonable disposal of the bank funds received from customers. Unfortunately, most often this can all be determined only by experience or at best by the feedback of other people or organizations that have already risked their money.