financial-services v1.0.0A

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---
name: "financial-services"
description: 'Industry knowledge for Financial Services advisory. Covers banking, capital markets, insurance, wealth management taxonomy, key metrics (NIM, CET1, ROE, combined ratio), regulatory frameworks (Basel III/IV, Dodd-Frank, MiFID II, PSD2), fintech trends, and stakeholder mapping for executive and practitioner engagements.'
metadata:
  author: "AgentX"
  version: "1.0.0"
  created: "2026-03-04"
  updated: "2026-03-04"
compatibility:
  frameworks: ["agentx"]
  platforms: ["windows", "linux", "macos"]
---

# Financial Services Domain Knowledge

> Industry taxonomy, metrics, trends, and stakeholder context for consulting and advisory engagements in Financial Services.

## When to Use

- Preparing research briefs for banking, insurance, or capital markets clients
- Building executive presentations for financial institutions
- Creating comparison matrices for fintech or digital transformation initiatives
- Advising on regulatory compliance (Basel, Dodd-Frank, PSD2)
- Stakeholder engagement with CFOs, CROs, treasury, compliance, or technology leaders

## Industry Taxonomy

### Primary Segments

```
Retail Banking
+-- Consumer Lending: mortgages, auto loans, personal loans, credit cards
+-- Deposits & Payments: checking, savings, digital wallets, real-time payments
+-- Small Business Banking: commercial lending, treasury services, merchant acquiring

Commercial & Corporate Banking
+-- Corporate Lending: syndicated loans, revolving credit, term loans
+-- Trade Finance: letters of credit, documentary collections, supply chain finance
+-- Treasury & Cash Management: liquidity, pooling, FX hedging, payment initiation
+-- Transaction Banking: correspondent banking, clearing, settlement

Investment Banking & Capital Markets
+-- Advisory: M&A, restructuring, capital raising (IPO, follow-on, SPAC)
+-- Sales & Trading: equities, fixed income, FX, commodities, derivatives
+-- Prime Brokerage: margin lending, securities lending, clearing
+-- Research: equity research, credit research, macro strategy

Wealth & Asset Management
+-- Private Banking: UHNW/HNW client advisory, family office services
+-- Asset Management: mutual funds, ETFs, alternatives (PE, hedge, real assets)
+-- Robo-Advisory: algorithmic portfolio management, goals-based investing
+-- Retirement & Pensions: defined benefit/contribution, annuities

Insurance
+-- Life & Health: term, whole life, disability, long-term care
+-- Property & Casualty (P&C): auto, home, commercial, specialty
+-- Reinsurance: treaty, facultative, ILS (insurance-linked securities)
+-- Insurtech: embedded insurance, parametric, usage-based
```

### Sub-Sectors

| Sub-Sector | Description | Key Players (Archetypes) |
|------------|-------------|--------------------------|
| Universal Banks | Full-service (retail + commercial + investment) | G-SIBs (Global Systemically Important Banks) |
| Regional Banks | Geographically focused commercial/retail | Mid-size, community banks |
| Neobanks / Challengers | Digital-only, no branch network | Licensed or banking-as-a-service |
| Payment Networks | Card networks, real-time payment rails | Network operators, processors |
| Insurance Carriers | Risk underwriting, claims management | Life, P&C, specialty |
| Asset Managers | Portfolio management, fund administration | Active, passive, alternatives |
| Fintechs | Technology-first financial products | Lending, payments, wealthtech |
| Infrastructure / Exchanges | Market infrastructure, clearing, settlement | Exchanges, CSDs, CCPs |

## Key Metrics & KPIs

### Banking

| Metric | Definition | Benchmark |
|--------|-----------|-----------|
| Net Interest Margin (NIM) | (Interest income - interest expense) / avg assets | 2.5-3.5% typical |
| CET1 Ratio | Common Equity Tier 1 / Risk-Weighted Assets | > 10.5% (Basel III minimum + buffers) |
| Return on Equity (ROE) | Net income / shareholders' equity | > 10% = strong |
| Return on Assets (ROA) | Net income / total assets | > 1% = strong |
| Cost-to-Income Ratio (CIR) | Operating expenses / operating income | < 55% = efficient |
| Loan-to-Deposit Ratio (LDR) | Total loans / total deposits | 80-90% = balanced |
| Non-Performing Loan Ratio (NPL) | NPLs / total loans | < 2% = healthy |
| Provision Coverage Ratio | Loan loss provisions / NPLs | > 100% = well-covered |
| Liquidity Coverage Ratio (LCR) | HQLA / 30-day net cash outflows | > 100% (Basel III) |
| Net Stable Funding Ratio (NSFR) | Available stable funding / required stable funding | > 100% (Basel III) |

### Insurance

| Metric | Definition | Benchmark |
|--------|-----------|-----------|
| Combined Ratio | (Claims + expenses) / earned premiums | < 100% = underwriting profit |
| Loss Ratio | Incurred losses / earned premiums | Lower = better claims experience |
| Expense Ratio | Operating expenses / written premiums | Lower = more efficient |
| Investment Yield | Investment income / invested assets | Depends on rate environment |
| Solvency II Ratio | Own funds / solvency capital requirement | > 150% = comfortable |
| Claims Reserve Adequacy | Actual vs estimated ultimate losses | Stable development preferred |

### Wealth & Asset Management

| Metric | Definition | Benchmark |
|--------|-----------|-----------|
| AUM (Assets Under Management) | Total client assets managed | Growth rate matters |
| Net Flows | New money in minus redemptions | Positive = organic growth |
| Fee Margin (bps) | Revenue / AUM in basis points | 15-80 bps depending on strategy |
| Alpha | Excess return vs benchmark | Positive = value-added |
| Sharpe Ratio | Risk-adjusted return | > 1.0 = good |
| Client Retention Rate | Clients retained year-over-year | > 95% = strong |

## Regulatory & Compliance Landscape

| Framework | Jurisdiction | Focus |
|-----------|-------------|-------|
| Basel III / IV | Global (BCBS) | Capital adequacy, leverage, liquidity |
| Dodd-Frank Act | United States | Systemic risk, consumer protection, Volcker Rule |
| SEC / FINRA | United States | Securities regulation, broker-dealer oversight |
| MiFID II / MiFIR | European Union | Investor protection, market transparency |
| PSD2 / PSD3 | European Union | Open banking, payment services, strong auth (SCA) |
| GDPR / CCPA | EU / California | Data privacy, consent, right to erasure |
| AML / KYC / BSA | Global | Anti-money laundering, customer due diligence |
| SOX (Sarbanes-Oxley) | United States | Financial reporting controls, audit independence |
| IFRS 9 / CECL | Global / US | Expected credit loss accounting |
| Solvency II / ICS | EU / Global | Insurance capital requirements |
| FCA Consumer Duty | United Kingdom | Outcomes-focused consumer regulation |
| DORA | European Union | Digital operational resilience for financial entities |

## Current Trends (2024-2026)

| Trend | Impact | Relevance |
|-------|--------|-----------|
| Generative AI in Financial Services | Fraud detection, credit decisioning, robo-advisory, document processing | Efficiency, risk, compliance |
| Open Banking / Open Finance | API-based data sharing, embedded finance, BaaS | Revenue, partnerships |
| Real-Time Payments | FedNow, SEPA Instant, UPI adoption | Infrastructure modernization |
| Digital Assets & Tokenization | CBDCs, security tokens, DeFi custody | New products, regulatory uncertainty |
| ESG / Sustainable Finance | Green bonds, ESG scoring, climate risk stress testing | Regulatory, investor demand |
| Core Banking Modernization | Cloud-native cores, composable architecture | Legacy transformation |
| Embedded Finance | Financial products in non-financial platforms | Distribution, partnerships |
| RegTech Adoption | Automated compliance, real-time reporting, AI surveillance | Cost reduction, accuracy |
| Cybersecurity / Fraud | Deepfake fraud, synthetic identity, ransomware | Operational resilience |
| Consolidation / M&A | Regional bank mergers, fintech acquisitions | Market structure |

## Stakeholder Map

| Role | Priorities | Language |
|------|-----------|----------|
| CEO / Board | Growth strategy, shareholder value, regulatory standing | Business, strategic |
| CFO / Treasurer | Capital adequacy, funding costs, NIM management | Financial, quantitative |
| CRO (Chief Risk Officer) | Credit risk, market risk, operational risk, model risk | Risk frameworks, scenarios |
| COO | Operational efficiency, cost-to-income, process automation | Operational, KPI-driven |
| CTO / CIO | Core modernization, cloud, API strategy, data platform | Technology, architecture |
| CCO (Chief Compliance Officer) | Regulatory change, AML/KYC, reporting obligations | Regulatory, legal |
| CMO / Head of Digital | Customer acquisition, digital channels, personalization | Customer, digital |
| Head of Wealth / Private Banking | Client retention, AUM growth, advisory model | Relationship, portfolio |
| Head of Trading | Execution quality, alpha generation, risk limits | Quantitative, markets |
| Actuary (Insurance) | Pricing adequacy, reserve sufficiency, catastrophe models | Statistical, actuarial |

## Discovery Questions

Use these to scope engagements and understand client context:

- What is your current cost-to-income ratio and where is the efficiency target?
- How are you approaching core banking/insurance platform modernization?
- What is your CET1 ratio trajectory and capital planning approach?
- Where are you on the open banking / API journey?
- What AI/ML use cases are in production vs pilot today?
- How do you manage regulatory change across jurisdictions?
- What is your customer acquisition cost (CAC) for digital channels?
- How do you measure and report ESG / climate risk exposure?
- What is the competitive threat from fintechs/neobanks in your market?

## Anti-Patterns

- **Ignoring regulation**: Financial Services is heavily regulated -- every recommendation must consider compliance impact
- **One-size-fits-all**: Retail banking, insurance, and capital markets have fundamentally different economics
- **Technology-first thinking**: Start with business outcomes and regulatory requirements, not technology
- **Stale rate assumptions**: Always verify current interest rate environment before margin analysis
- **Overlooking conduct risk**: Consumer protection and fair treatment are board-level concerns
- **Generic fintech comparisons**: Compare specific capabilities, not "fintech vs bank" generically