Business Services – Introduction
Business services are activities that support the smooth functioning and growth of business enterprises. They help in production, distribution, financing, and communication, without producing tangible goods. Major Types of Business Services
- Storage
- Insurance
- Banking
- Transportation
- Warehousing
- Communication
These services act as the backbone of modern business operations.
Goods and services
- A good is a physical product capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer.
- Goods are commodities or items of all types, except services involved in trade or commerce.
- Services are essentially intangibles. Their purchase does not result in the ownership of anything physical. for example, seek advice the doctor you cannot purchaser him amusement park.
- Services are all those economic activities that are intangible and imply an interaction to be realised between the service provider and the consumer.
Key Features of Services
- Intangibility – Services cannot be seen or touched for e.g., legal advice.
- Inconsistency (Variability) – Quality may be differ based on provider or customer for e.g., salon services.
- Inseparability – Production and consumption occur together for e.g., dining at a restaurant.
- Non-storability (No Inventory) – Services cannot be stored for future use for e.g., train journey experience.
- Customer Involvement – Active participation of customers is required for e.g., online banking.
Service Vs Goods
|
Basis |
Services |
Goods |
|
Nature |
An activity
or process (e.g., watching a movie in a cinema hall) |
A physical
object (e.g., video cassette of a movie) |
|
Type |
Heterogeneous |
Homogeneous |
|
Intangibility |
Intangible
(e.g., doctor’s treatment) |
Tangible
(e.g., medicine) |
|
Inconsistency |
Different
customers having different demands (e.g., mobile services) |
Different
customers getting standardized demands fulfilled (e.g., mobile phones) |
|
Inseparability |
Simultaneous
production and consumption (e.g., eating ice cream in a restaurant) |
Separation of
production and consumption (e.g., purchasing ice cream from a store) |
|
Inventory |
Cannot be
kept in stock (e.g., experience of a train journey) |
Can be kept
in stock (e.g., train journey ticket) |
|
Involvement |
Participation
of customers at the time-of-service delivery (e.g., self-service in a fast-food
joint) |
Involvement
at the time of delivery not possible (e.g., manufacturing a vehicle) |
Types of services
- Business Service – Those services which are used by business enterprises for the conduct of their activities. For example – banking, insurance, transportation, warehousing and communication services.
- Personal services – Those services which are experienced differently by different customers. These services cannot be consistent in nature. They will differ depending upon the service provider. They will also depend upon customers preference and demands. For example – parlour, tourism, recreational services, restaurants.
- Social service – Those services that are generally provided voluntarily in pursuit of certain social; goals. These social goals may be to improve the standard of living for weaker sections of society to provide educational services to their children or to provide health care and hygienic conditions in slum areas. These services are usually provided voluntarily but for some consideration to cover their costs. For example – health care and education services provided by certain non-government organisations (NGOs) and government agencies.
Banking Service
A Bank accepts money on deposits, repayable on demand and also earns a margin of profit by lending money. A bank stimulates economic activity in the market by dealing in money.
Main function
It mobilises the savings of people and makes funds available to business financing their capital and revenue expenditure. It also deals in financial instruments and provides financial services for a price. i.e. interest, discount, commission etc.
Types of banks
- Commercial banks – It deals in money. These are governed by Indian banking regulation act 1949 and according to it banking means accepting deposits of money from the public for the purpose of lending or investment. Two types of commercial banks – public sector and private sector banks.
- Public sectors banks are those in which the government as a major stake and they usually need to emphasise on social objectives than on profitability. For example – public sector bank like SBI, PNB, IOB etc.
- Private sector banks are those which are owned managed and controlled by private promoters and they are free to operate as per market forces. For example – HDFC bank, ICCI bank, Kotak Mahindra bank etc.
- Cooperative banks are governed by the provisions of state cooperative societies act and meant for providing cheap credit to their members. For example – The Assam cooperative apex bank ltd, The Arunachal Pradesh state cooperative apex bank Ltd.
- Specialised banks are foreign exchange banks, industrial banks, development banks, export-import banks catering to specific needs of these unique activities. These banks provide export import banks catering to specific needs of these unique activities. For example – The national bank for agriculture and rural development (NABARD), the small industries development bank of India (SIDBI), National Housing Bank (NHB).
- Central banks, the central bank of any country supervises, controls and regulates the activities of all the commercial banks of that country. It is banker bank; it also acts as a government banker. It controls and coordinates currency and credit policies of any country. The reserve bank of India is the central bank of our country. The federal reserve system (federal reserve / fed) is the central banking system of the United States.
Function of Commercial Banks
- Acceptance of deposits - Accepting deposits (savings, current, fixed)
- Lending of funds - Lending money to individuals and businesses
- Cheque facility - Providing cheque and draft facilities
- Remittance of funds - Transferring funds domestically and internationally
- Allied service - Offering allied services like lockers, credit cards, and advisory services
E-Banking
- Availing banking services through internet.
- Internet banking means any user with a PC and a browser can get connected to the banks website to perform any of the virtual banking functions and avail of any of the bank’s services.
- There is no human operator to respond to the needs of the customer.
- The bank has a centralised data base that is web enabled. All the services that the bank has permitted on the internet are displayed on a menu.
- Centralised data base that is web enabled. All the services that the bank has permitted on the internet are displayed on a menu. Any service can be selected and further interaction is dictated by the nature of service.
- E-Banking or Electronic Banking services provided by the banks on the internet. E banking is a service provided by many banks that allows a customer to conduct banking transactions such as managing savings, checking accounts applying for loans or paying bills over the internet using a personal computer mobile telephone or handheld computer.
- It lowers the transaction cost adds value to the banking relationship and empower customer
E-Banking – Services offered by E-banking are
- Automated teller machines (ATM) – Automated teller machine or ATM or ABM (Automated bank machines) or Cash machines. It is an electro mechanical machine which consists of automated banking platforms that allow clients to perform smooth transactions without the assistance of a branch representative or teller.
- Credit Cards Electronic or Digital Cash & Electronic Bank Transfer (EFT) - Electronic transfer of money over online network. The three wats in which EFT can be done are
- NEFT (National Electronic Fund Transfer) – Transactions of any amount can be sent to the recipients account without any maximum limit to the funds that can be sent in a day. The national electronic funds transfer method does not have a minimum transfer limit ceiling.
- RTGS (Real tome gross settlement) – Large amounts of funds can be used to transfer instantly with RTGS. The transaction speed is faster. The Minimum amount to be transferred has to be of Rs. 2 lakhs and above for RTGS.
- UPI – Real-time transfers using mobile applications now limit is upto 1 lakhs per day and Maximum of 20 transactions per day.
- Point of Sales (POS) are the terminals installed in shops are stores where payment for purchase can be done through debit and credit cards.
- Electronic Data Interchange (EDI) is a computer-to-computer exchange of business documents in a standard electronic format between two or more trading partners. It enables companies to exchange information electronically in a structured format, eliminating the need for manual data entry and reducing the cost and time associated with paper-based transactions. By switching from a paper-based transfer of business documents to an electronic one companies realize significant advantage such as reduced expense, improved processing speed, decreased mistakes and enhanced business partners relations.
E- Banking Benefits
- It facilitates digital payments and promotes transparency in financial statements
- E-banking provides 24 hours, 365 days a year services to the customers of the banks
- It inculcates a sense of financial discipline by recording each and every transaction
- Greater customer satisfaction by offering unlimited access to the bank not limited by the walls of the branch and less risk and greater security to the customer as they can avoid travelling with cash.
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