Financial services are the businesses that offer investors, individuals and companies access to investments like stocks, bonds and mutual funds. They also provide insurance and loans, as well as services that support these activities. The sector includes banks, credit unions, credit-card companies, credit-reporting agencies, stock brokerage firms, and investment management companies. It also encompasses debt and equity markets and institutions, cash management companies, payment and settlement systems, and the accounting and auditing services that support these functions.
As the world becomes increasingly digitized, many players in the financial services industry are scrambling to adapt and innovate. Some are combining their existing offerings, while others are creating new ones. The result is that today’s financial services are more interconnected and complex than ever before.
For example, a bank may look at data to understand the needs of customers during a specific life stage, such as marriage or purchasing a home. This helps the bank develop products and services that are relevant to their customer. Additionally, as the coronavirus pandemic continues, more people are working from home, which has caused some financial companies to expand their remote services.
The field of financial services can be complicated, and it is important to know your role and the larger picture. As such, it is vital to do your research before entering this field, as there are thousands of job titles that may not pave the way to achieving your career goals.
Historically, each sector of the financial services industry more or less stuck to its niche. For example, banks provided deposit and loan services, while mortgage associations offered mortgages. As the industry became deregulated, this changed and banks began to offer more investment, insurance and lending services.
In addition to these main sectors, there are a number of sub-sectors in the financial services industry. These include actuarial services, which assess the risk of offering insurance policies. These are essential to help customers make informed decisions. Another is reinsurers, which insure the primary insurers against catastrophic losses. This helps them to lower their rates and attract more customers.
Another sub-sector is market and financial intermediation, which covers a wide range of activities. This includes providing capital to businesses for growth and expansion, advising on mergers and acquisitions, as well as facilitating payment transactions. Other parts of this sector are accounting and tax filing services, credit card companies and networks, and debt resolution and international money transfer services. It also includes the global exchanges that facilitate stock, derivative and commodity trades. The global financial services industry is worth trillions of dollars, and it is growing rapidly. It is a critical part of the economy and provides many jobs worldwide. The good news is that it can be a highly lucrative and rewarding career path, provided you understand the field and are prepared to take on its challenges.
