Financial services are a broad category of businesses that provide a wide range of financial products and services. These include banking, credit-card companies, investment funds, insurance, and a host of other related business activities. Some of these activities are highly regulated, while others are subject to looser regulation. Financial services are an integral part of a well-functioning economy, and they play an important role in the lives of individuals, families, and businesses.
Financial services providers take deposits and repayable funds and then lend them out to customers, earning profits on the difference between what they pay depositors and what they receive from borrowers. They also administer payment systems that enable transactions and settlement of accounts through credit and debit cards, bank drafts such as checks, and electronic transfers between accounts. They may trade securities, foreign exchange, and derivatives. They may also help borrowers raise money by issuing securities such as stock or bonds. They also manage assets and offer advisory services.
A healthy financial services sector allows people to obtain the money they need to buy houses and cars, invest in their futures, or start businesses. It provides millions of people with secure jobs, helps them protect their health and property through insurance policies, and keeps the economy moving by providing loans to firms and individuals.
The global financial services industry is huge and encompasses many different types of companies. Some of the most well-known are banks, credit unions, and credit-card companies. However, a growing number of non-banking companies are getting into the fray. For example, Apple and Amazon now offer their own payment solutions. In addition, a number of non-profits provide counseling and advice regarding financial matters.
Some of the most important players in financial services are central banks, commercial and investment banks, savings institutions, and insurance companies. Other important players include credit-card companies, debt-resolution services, and international payment systems providers. The industry is governed by regulations designed to ensure its safety and soundness. These regulations are usually created in response to some event, such as a financial crisis or recession.
Working in the financial services industry can be a challenging and rewarding career choice, but it is not for everyone. The stress that comes with working in this field can lead to work-life balance problems and burnout. Moreover, the lack of career advancement opportunities in some financial services positions can be frustrating for those seeking higher-level careers. Nevertheless, the demand for workers in the financial sector continues to grow as consumers seek more personalized finance options. The global market for financial services is expected to reach $26.5 trillion by 2022. This growth is driven by increasing personal wealth, rising consumer demand, and a maturing population.