The Financial Services Industry
Financial services is a broad term that encompasses a wide variety of entities offering banking, investment and credit services. It is a key driver of economic development, enabling individuals to invest and save in productive enterprises while protecting their investments through insurance policies. It also extends credit, manages liquidity and risk, and facilitates the transfer of assets between investors. This is a large and important industry that features thousands of depository institutions, investment companies, lenders, finance brokers and insurance firms.
Although the financial services industry may seem all-encompassing today, it wasn’t always so. Before the 1970s, each sector of the industry specialized in its own service. Banks provided deposit and savings accounts; loan associations provided mortgage loans; and brokerage firms offered investment opportunities in stocks, bonds and mutual funds. Credit card providers like Visa and MasterCard provided credit cards.
Now, with technological advances, many financial services are available online. This allows people with more modest incomes to benefit from the financial system. Previously, they might not have been able to afford to purchase a house, or even a car, because they didn’t have access to loans and other financial products.
Financial services are essential to a functioning economy, as they allow people to make big purchases with confidence and to save for the future. They also allow businesses to expand and thrive, generating more jobs and wealth. However, when the financial services sector starts to falter, it can quickly cause a recession or even a depression. This is because when banks stop lending, businesses can’t expand, and consumers start to spend less money.
The future outlook for the financial services sector is mixed. The recent stock market crash has hurt the industry, but it is rebounding and showing signs of recovery. There are also new competitors entering the industry, such as tech giants like Apple and Amazon, which are attempting to offer their own bank accounts and credit cards, to compete with traditional banks. In addition, the rise of digital gig work is changing how many financial professionals are employed.
The best career prospects for individuals with a background in finance are in asset management, banking and financial research. These positions require a strong knowledge of math, statistics and computer science, as well as the ability to interpret complex data and develop innovative solutions. These positions can pay quite well, with salaries in the high five figures possible. In addition, financial services companies are known for promoting employees from within based on merit, so if you’re willing to put in the work, there are plenty of opportunities to move up the ladder. This industry also offers excellent job security, and it’s an ideal place to get started in a career in business.