Financial Intermediation: Financial Innovation

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1.0 Introduction
''Financial Innovation can be defined as positive changes in financial intermediation or financial system: in financial institutions (commercial banks, insurance companies, investment and pension funds and investment banks) and in financial markets (stock market, debt instrument market and derivative market). ''
I think it's essential to have innovation in de financial services sector so financial companies keep moving forward, keep improving their services and increasing competition between the companies. In this paper I will mostly talk about banks and their innovations and leave out all the other companies in the financial services sector to scale down the subject.
In the last 50years there were a couple big innovations in the financial services industry such as internet banking, ATM machines and debit cards. These big innovations were a lot easier en less time consuming for the bank and customers. We can state that these changes were positive changes in the financial system which corresponds to the definition given above.
Traditionally, a bank was founded for people to put their money aside in a safe place and for people who needed a place to get a loan for any kind of purposes. Nowadays, a bank grants a lot more services then they did traditionally, which I think is a result of increasing knowledge and most of all the result of technology. Modern technology like the internet, debit cards (smart)phones, and computers completely changed the way banks could provide their services. These modern technologies made it possible for banks to innovate their traditional way of banking and come up with effective and efficient tools to improve service and save money at the same time. Some examples of this are checking...

... middle of paper ...

...become a community, in which different financial service providers and customers combine their efforts the help the community to manage their own finances. The community will have an online platform where they can connect, collaborate, participate and help each other and in which the customer is very self serviced. The online platform should also be a centre of knowledge for the community.

List of source references

http://baselinescenario.com/2009/04/18/financial-innovation-for-beginners/ http://www.investopedia.com/terms/s/securitization.asp http://www.brighthub.com/money/personal-finance/articles/42073.aspx http://nl.wikipedia.org/wiki/Geschiedenis_van_het_internet http://www.buzzle.com/articles/history-of-internet-banking.html http://nl.wikipedia.org/wiki/Geschiedenis_van_het_internet http://www.praxis.ee/fileadmin/tarmo/Toimetised/toimetised_06_2003.pdf

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