Introduction Financial Sector
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Rank a Brand will aim to cover 1) banks, 2) investment funds and 3) insurance companies
1) Banking activities can be loosely split into 3 parts:
A) Retail banking
• Provision of financial services direct to consumers i.e. checking accounts, mortgages, personal loans, debit cards, credit cards
• Some banks also have a “Private banking” division, which deals with the assets of high net worth individuals
B) Commercial banking
• Mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public
C) Investment banking
• An investment bank is a financial institution that raises capital, trades securities and manages corporate mergers and acquisitions. Pure investment banks will not be ranked in Rank a Brand as there is little or no contact with the consumer
Generally banks raise funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time (or term) deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds. The financing activities of these will be assessed by Rank a Brand, excluding the financing to consumers.
2) Investment management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds). Institutions often control huge shareholdings. In most cases they are acting as fiduciary agents rather than principals (direct owners). The owners of shares theoretically have great power to alter the companies they own via the voting rights the shares carry and the consequent ability to pressure managements, and if necessary out-vote them at annual and other meetings. The investing activities of these will be assessed by Rank a Brand.
3) Insurance companies may be classified into two groups:
A) Life insurance companies, which sell life insurance, annuities and pensions products.
B) Non-life, General, or Property/Casualty insurance companies, which sell other types of insurance.
Insurers make money in two ways:
• Through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks;
• By investing the premiums they collect from insured parties.
The underwriting and investing activities will be ranked. Underwriting of consumers will not be checked.
In practice financial services offer a combination of these services so may have to be ranked based on all the criteria for financing, investing and underwriting. The ranking criteria will be tightened over time as standards improve.
