1. Finance
  2. Channel financing

2.1 Multichannel Strategy for the Financial Services Industry

     3. Financial instruments

3.1 Floating rate Bonds

3.2 Zero interest bonds

3.3 Deep discount bonds

3.4 Underwriting

3.5 Auction rate security

3.6 Secured premium notes

3.7 Fully convertible debentures

3.8 Differential shares

3.9 Securitised paper

3.10 Perpetual bond

3.11 Municipal bond

  1. Finance

Finance is a comprehensive term that defines events and happening associated with banking, leverage or debt, credit, capital markets, money, and investments.

  • Channel financing

A channel in finance and economics means a distribution channel which is a structure of intermediaries between the producers, suppliers, wholesalers, retailers, distributors, consumers, and even the Internet for the movement of a good or service. Therefore Channel financing can be called as a short-term fund transferring unit to the chain stakeholders. Channel financing is completely different from other financing units.

2.1 Multichannel Strategy for the Financial Services Industry

As companies increase the channels in which they interact with customers also increases. Therefore, those customers expect reliable experience across those channels. If we are using a multichannel strategy, it will be considered as a technology issue. But many firms have spend their capital in business to deploy multichannel initiatives, most remarkably in the retail industry which is used for usability and functionality around marketing activity. It’s time for businesses to outbuilding their predetermined ideas of multichannel strategy and the following are the potential for:

• As long as a constant and positive customer experience

• Producing returns while declining costs

• Serving a variety of industries

Multichannel customer strategy can be formulated by Banks and based on modified customer behavior and market conditions, banks can involve in the multichannel distribution in recent years. Thus in several cases, channels still operate as storage towers so banks can’t offer a seamless experience to their customers.

  • Financial instruments

Financial instruments are monetary contracts between parties. Let’s see in details about the type of financial instruments below

3.1 Floating rate bonds are valuable note which possess a variable coupon to keep the money market rate namely federal funds rate.

3.2 Zero-interest bonds: Face value which is repaid at the maturity period that takes on the positive time value of money. There are no periodic interest payments called coupons.

3.3 Deep discount bonds sell at a discount of 20% or more to par and produce considerably higher than the usual rates of fixed-income securities with similar profiles

3.4 Underwriting is the process where each and everyone conditions on financial risk and processes the same. Specified premium process satisfies on the process sequence.

3.5 Auction rate generally comes in bond with a long-term maturity of 20 to 30 years

3.6 Secured premium notes are distributed with detachable warrants and are redeemable after a certain period.

3.7 Fully convertible debentures are the debt security which helps to make the entire value change into equity shares at the issuer’s notice.

3.8 Differential shares look the same as ordinary equity shares, but here, the stock will not lower down and this will make the promoters vote high and this tends to be hard for hostile takeovers.

3.9 Securitised paper is a bond note, which is received from a borrower and investor who helps in the exchange of funds through securitization.

3.10 A perpetual bond is a bond with no maturity date, it may be treated as equity, not as debt. Issuers pay coupons on perpetual bonds forever, and they do not have to redeem the principal.

3.11 A municipal bond is a bond issued by a local government or one of their agencies. And mainly used in public projects such as roads, schools, airports and seaports, and infrastructure-related repairs.

Hope this article provides understanding on the distribution channels in finance and instruments used in finance.

About the Author

BankReed Admin

Banking Professional with 16 Years of Experience. The idea to start this Blogging Site is to Create Awareness about the Banking and Financial Services.

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