Financial services are economic services related to finance, including banking, credit unions, stock brokerage firms, insurance agencies and other companies that provide investment management, consumer credit, mortgage loans and other financial intermediation. Financial services also include debt resolution, accounting services (for personal and business) and global payment systems and networks like Visa and Mastercard.
The financial services industry is made up of thousands of depository institutions, providers of investment products, insurers, credit-card companies, mortgage banks and other credit intermediation organizations, as well as the critical financial market utilities. The sector also includes accounting professionals, tax filing services, money transfer firms, international banking facilities, credit card network providers and centralized clearinghouses that settle trades for securities, derivatives and commodities.
A financial services career can be lucrative and satisfying, but the industry is not without its challenges. For one, it’s highly competitive, and the work can be very stressful. Another challenge is the constant need for regulation, which can stifle innovation and growth. Lastly, the industry is prone to large swings in demand, making it difficult for businesses to plan and budget for future needs.
Despite the challenges, financial services remain an essential part of the economy and are key to the success of other industries. The industry serves individuals, small and large businesses, nonprofits and even governments.
As the world becomes more connected, financial services are becoming increasingly digitized and diversified. This has resulted in a number of new opportunities for those interested in the industry. In addition to traditional banking and investments, the sector now encompasses digital banking, payments, crowdfunding and venture capital. It’s important to note, however, that not all digitized financial services are created equal. Some are more secure than others, and it’s essential to weigh the pros and cons of each before pursuing a position.
Some of the most popular careers in financial services include accounting, investment banking, credit card management and lending. Those who pursue these careers often find themselves working long hours, which can be stressful and lead to burnout. They may also face high competition, particularly in the areas of wealth management and private banking.
A family office, for example, provides a team of financial advisers who are trained to serve as both brokers and consultants to wealthy families. Other careers within the financial services industry include underwriting, which refers to the process of assessing and writing up insurance policies for consumers. Reinsurance is a type of insurance that insurers buy to protect themselves from catastrophic losses. Finally, angel investors are independently wealthy individuals who invest in small or start-up businesses, often in exchange for an ownership stake and a share of the profits. The financial services industry is heavily regulated to ensure fairness and transparency for consumers. Independent regulatory bodies monitor and enforce these rules. Some examples of these regulators are the Financial Industry Regulatory Authority (FINRA) and the Office of the Comptroller of the Currency.