For supervision purposes, financial services that financial services firms engage in are broadly classified into primary business, secondary business, and concurrent business.
The businesses banks may carry on are divided into primary, secondary, and concurrent businesses for supervision purposes.
The primary business of a bank is banking services such as accepting deposits and making business and consumer loans and other credit services that are reserved exclusively for banking organizations as provided in the Banking Act. Foreign exchange services, certain types of securities-related activities such as issuance of debt for funding, and discounted commercial bill services are also classified as primary business services.
Secondary business refers to bank services such as credit guarantees, clearing of certain negotiable instruments, and factoring that are not directly related to banking services and secondary to a bank's primary businesses. A new secondary service business to be offered by a bank must be reported to the FSC/FSS at least seven days in advance.
Concurrent businesses are nonbanking businesses that a bank may engage in together with the primary and secondary businesses. They thus include activities connected with buying and selling of derivatives, treasuries, and municipal bonds, investment advisory services, credit card services, bancassurance, and insurance agency services. For classification purposes, concurrent businesses are further divided into three categories: Type 1 businesses requiring FSC/FSS authorization/approval or registration; Type 2 businesses open to banks under the existing rules and regulations; and Type 3 businesses posing little or no risk to a bank's safety and soundness such as custodian services for asset securitization and consumer credit information services.