I could be wrong (someone please correct me), but I do not believe there is an out of the box service to do this.
However, you could write something to do this (although the performance might not be great).
I believe you are correct. OOTB, there isn't a dynamic image service available. The closest you might get is Dynamic Converter, but even that would be a kludge.
Thanks Jonathan & William for the confirmation. Any suggestions around the approach for implementing the custom functionality?
What you can do is write a custom service, get the native file of the image file and pass it as a FILE parameter alongwith width and height.
You can check this link for the sample code:
You can have your own dynamic image converter component.