The financial services industry comprises the businesses that manage money, including credit unions, banks, credit-card companies, insurance firms, consumer-finance companies, stock brokerages and investment funds. It also includes companies that provide financial market utilities, such as clearing houses, securities exchanges and payment systems.
The world’s economies rely on the financial services sector to function. Individuals rely on it to borrow money for large purchases, save money for retirement and other goals, and safeguard their assets from loss or damage through insurance. Companies rely on it to get the financing they need to expand operations and create jobs.
A healthy financial services sector provides the means for people to invest in businesses and startups, and it ensures that families can afford a mortgage, car or college tuition and still have money left over for other expenses. It also allows businesses to grow, allowing them to employ more people and boost productivity.
The most important service provided by the financial services industry is deposit-taking, which involves accepting deposits from the public and offering checking and savings accounts, which often offer interest. It also provides lending of all types (personal and commercial) and financial leasing. These activities are complemented by a wide range of other auxiliary financial services such as credit reference and analysis, investment and portfolio research and advice, and consultancy on corporate restructuring and strategy.
Regulatory bodies ensure that financial institutions operate fairly and are held accountable. They are also charged with overseeing the different sectors within the financial services industry, upholding transparency and ensuring that clients are treated well. Examples of these agencies include the Financial Industry Regulatory Authority and the Office of the Comptroller of the Currency.
There are many careers in the financial services industry, from entry-level teller positions to top executives. The type of role that you choose should depend on the career path you want to pursue and your skill set. Some jobs require a degree, but many don’t. In fact, some positions in the financial services industry are more about interpersonal skills than education.
Without financial services, the economic dynamism of the world would be significantly diminished. Imagine a world where 2 billion people have no access to savings accounts or credit cards, and can’t finance their business activities or purchase healthcare or life insurance. Having access to financial services ensures that people can afford to make the most of their talents and work hard, while protecting them against the risk of natural disaster or illness. Without them, the growth of all sectors of a country’s economy would be compromised. Financial services also enable people to diversify their investments and gain a higher return on their savings. These services are essential for a developing nation to sustain its growth, and to avoid economic shocks and recessions. Financial services also help individuals buy homes and cars, pay for their children’s education, and take care of their health and medical needs. It also helps them plan for their future and retire with dignity.