The banking techniques which include only limited transactions, savings, loans, funds for mutual and pension schemes, credit unions, and other insurance companies, are done by financial intermediaries, and these are the one who offers money to those in need. They provide money quickly through a desired network, and all the transactions take place electronically.
Function of financial intermediaries
They are the ones who provide money to those who are in need, and they provide funds for credit unions, savings, loans, banks, mutual funds, insurance companies etc from investors and borrowers. For whatever kind of transaction that they perform, they would also ensure that the money is always kept moving. This might be either through a personal loan, investments made, or other financial transactions.
Uses of financial intermediaries
For the effective running of a business concern, finance is essential for meeting the working capital, for purchasing the assets required to run the business, and for other essential purposes. However, all these requirements are satisfied through the network of financial intermediaries. The intermediary bank information shows that a financial intermediary bank would borrow money from the savers, and they would make it available for those who are requesting the money.
Financial intermediary bank information shows that the financial intermediaries play a leading role in the financial economy of the country. They have a key role in keeping the financial transactions moving, and thus funds are made available all the time. They are quite liberal all the time, unless they meet a financial emergency, like in the case of a recession. During a recession period, financial intermediaries would tighten their requirements, so that providing money would not be really easy. They would even try to suspend providing money.
Today’ banking is not similar to that in the olden days. It has changed a lot during the intervening time. The introduction of electronic methods has enhanced the banking operations. This has effectively helped the financial intermediaries to carry out their transactions with ease. Before the introduction the electronic methods, delay to complete a transaction was almost regular, and the customers had to wait for long hours to complete a transaction. Even transferring funds included high risk, which is now avoided by using electronic banking. Financial intermediaries act more like a banking institution, as they make use of the electronic method and avoid the risk factor involved in each transaction.
The above was some information on how intermediary banks work, and how they are helpful to us.
Sean Mckelvey on Google+