Market Review Exercise - Dissertation Example

Service proliferation comes from the increasing number of services offered by the financial in their search for new avenues of revenue generation. The search for new avenues of revenue generation by the financial sector has also resulted in growing competition among the various financial organizations in the financial sector. A key reason for the proliferation of financial services is the trend in favour of government de-regulation or the loosening of the control strings of the government on the financial sector.

One of the reasons for the deregulation of the financial sector is for the ordinary citizen to earn more interest on savings and this has resulted in the trend for interest sensitive mix of funds. Developments in the field of information technology are used as tools for sharpening the competitive edge among the players in the financial, and also allow the many new services offered to ride piggyback on technology changes including automation. Effective use of the automation put in place requires generation of high volumes of sales, which means increased customer base and as a result the trend in consolidation and global expansion. . Differences between Building Societies and Banks Building societies are mutual institutions in which a major portion of the having a savings account in the building society or a mortgage from the building society are members and in essence operate in the financial markets as financial services providers for meeting housing finance needs.

Banks on the other financial enterprises in many cases hold public investment as stocks on which revenue has to be derived for paying out to the stock holders and so offer a plethora of financial services in the market towards revenue generation. Building societies are not so strongly governed by profit motives and so their services for housing purposes tend to be offered at lower costs; however they have a drawback in that there is a limit of 50% of their funds that they can seek from the wholesale market.

However, in the new millennium these differences are getting blurred, because of the cross provision of financial services that has seen building societies indulging in selling insurance, unit trust and other such long term investment products and banks also offering competition in these services (Spencer, 2000). Current Building Society Trends By incorporating as public limited companies, building societies are able to overcome the limitations that they have in access to capital from the financial markets.

This has seen the trend among building societies to become public limited companies. Such a move also helps them to overcome the restrictions of the UK Building Societies Act and face the challenge of reduced demand for housing finance. To offset the reduced demand for housing financial services, the trend after incorporation as public limited companies is to move into new areas of financial services