Financial services involve a broad range of organizations and products that help consumers or businesses acquire, manage, transfer, or use money. This sector includes banks, credit card companies, payment systems, and digital banking technology.
Banks provide a place for people to hold checking and savings accounts, and many also offer loans and mortgages. Loan associations provide consumer financing for purchases and investments, and brokerage firms sell investment opportunities in stocks, bonds, and mutual funds.
Insurance, which involves protecting a person’s assets from risk, is an important part of the financial services industry. Insurance agents and brokers shop for and negotiate rates, while underwriters determine the risks involved in a policy.
The financial services industry has been severely affected by recent deregulation, globalization, scandals, and the market collapse in 2008. However, the subprime mortgage crisis has led to consolidation of the sector, with many larger companies merging and reducing their costs, and a number of government-owned companies emerging.
Business enterprises rely on the financial services industry to finance their operations and keep their customers happy. When the financial services sector is strong, the economy is stronger as well. This can lead to increased production, employment, income, demand and prices for the goods and services that are produced.
When the financial services sector is weak, there may be less demand for goods and services, or the economy can stagnate due to a lack of consumer confidence or purchasing power. This can be a major concern for the government, as well as for the economy as a whole.
A person can pursue a career in the financial services sector if they have a love for numbers, a methodical approach to business, and want to help others make good financial decisions. This sector offers a variety of job roles, from financial analysts and planners to loan officers and insurance professionals.
Commercial Banks – These banks work to serve the needs of small to medium-sized businesses by providing loans, deposit accounts and credit facilities. They also provide overdraft agreements to allow the temporary advance of the bank’s own funds to meet a customer’s monthly spending commitments.
Investment Banks – These banks assist companies in raising capital, typically by selling bonds and shares of stock (debt). They also work to underwrite mergers and acquisitions, structured finance, and investment management.
Brokerage Firms – These businesses buy and sell securities on behalf of their clients and maintain a public stance on specific securities and industries. They can also act as prime brokers and buy and sell on behalf of hedge funds.
Real Estate Company – These businesses provide property ownership and rental services to their customers. They can also provide real estate loans and investments to investors, as well as develop and manage residential and commercial properties.
Debt resolution – This service helps individuals with excessive debt to pay their bills without filing bankruptcy. It can be a very expensive and stressful process for some, especially if the debtor has a credit card or other type of debt.