The financial services industry is one of the largest sectors in any economy. It includes a wide range of businesses that provide consumers, companies and governments with the capital they need to grow and achieve their economic goals. The industry includes banks, credit unions, brokerage firms and insurance companies. If the financial services sector breaks down, it can have serious repercussions for a country’s economy. If the financial system stops functioning, it can result in a recession, where consumers lose purchasing power and companies stop investing. When the financial services industry is strong, a country’s economy thrives.
The most important sector of the financial services industry is banking. Banks act as intermediaries between savers and borrowers. They collect funds from savers in the form of deposits, then lend those funds to borrowers who need money for various purposes, such as starting a business or buying a home. Banks also provide other services, such as storing cash and issuing checks.
Other financial services include investment management, securities trading and insurance. Investment management involves selecting and managing investments, such as stocks and bonds, on behalf of clients. Securities trading is the act of buying and selling stock and other assets in order to make profits. Insured products protect against financial loss, such as death or property damage.
As technology changes the world around us, the financial services industry is adjusting with it. Consumers are increasingly able to access the financial services they need online. This has opened new opportunities for the industry and created new jobs. It has also made some services more affordable to a larger segment of the population.
In addition to these online opportunities, the industry is changing due to mergers and acquisitions. Large financial services companies, such as banks and insurance agencies, are combining to offer more comprehensive options to consumers. This trend has led to more job opportunities and higher salaries for people working in the industry.
Before the 1970s, each sector of the financial services industry stuck to its niche. Banks provided checking and savings accounts, mortgage companies offered loans for homes and car purchases and credit card companies gave out cards. But when banks began to expand their offerings and merge with other industries, it allowed them to compete with each other more effectively.
Today, it seems as though financial services is all-encompassing. Banks offer checking and savings accounts, loan associations offer mortgages, credit card companies give out cards, stock brokers sell stocks and mutual funds and insurance companies provide life and property insurance. But it wasn’t always this way. Before the 1970s, financial institutions specialized in their offerings. This allowed them to better understand the needs of their customers and tailor their services accordingly. So if you’re thinking about working in the industry, consider what type of career path you want to take. Because while there are thousands of positions within the industry, not all pave the way to your ultimate goals.