Content

  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 Non-Convertible Debentures

3.8 Secured Zero Interest Partly Convertible Debentures with detachable

3.9 Separately tradable warrants

3.10 Fully convertible debentures

3.11 Differential shares

3.12 Securitised paper

3.13 Collateralised debt obligations

3.14 Inverse float bonds

3.15 Perpetual bond

3.16 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. Finance also involves the oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that make up economic systems.

  1. 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 is a very formally oriented program in which the bank provides short-term funds to the chain stakeholders. Moreover, channel financing is different from conservative lending.

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 companies have invested in infrastructure to deploy multichannel initiatives, most remarkably in the retail industry which is used for usability and functionality around marketing activity. And multichannel activity is often measured from a cost perspective, not as a potential revenue generator because of its technical nature. 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.

  1. Financial instruments

Financial instruments are monetary contracts between parties. They can be a currency, indication of an ownership interest in a contract or a pledged right to receive or deliver. Financial instruments are assets that are traded or packages of capital that may be traded. The assets include cash or a contractual right to supply or get cash or another type of financial instrument, or it may be a source of one’s ownership also. Let’s see in details about the type of financial instruments below

3.1 Floating rate Bonds are notes that have a variable coupon, equal to a money market rate such as federal funds rate, along with a constant quoted spread rate that remains constant.

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 individual or institution takes on financial risk for a fee and risk-taker write their name under the total amount of risk they were willing to accept for a specified premium.

3.5 Auction rate security type of variable-rate debt security that is sold through a Dutch auction. This is generally 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. It is a kind of non-convertible debenture (NCD) attached to the warranty

3.7 Non-Convertible Debentures enable the holder to buy several shares from the company at a predetermined price for a definite time frame. The warrants attached to NCDEs are allotted for full payment of the NCDs value.

3.8 Secured Zero Interest Partly Convertible Debentures with detachable can be termed as a transformable portion that provides equity shares to be interchangeable for debentures on a permanent amount on the date of allotment.

3.9 Separately tradable warrants make the price of the underlying to increase at top of the exercise price, the warrant’s holder helps to make the warrant and buy the underlying to the lower level of the market price or sell the warrant in the market.

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

3.11 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.

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

3.13 Collateralized debt obligations are a type of structured asset-backed security. It was initially made as elements for the corporate debt markets.

3.14 Inverse float bonds imply an inverse floater, with a type of debt instrument used in finance whose coupon rate has an inverse relationship to short-term interest rates.

3.15 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.

3.16 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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