The financial services industry encompasses a huge range of services and products. While many people think of banks, stock brokers and mortgage lenders when they hear the term financial services, these are just a small portion of what the industry actually covers. Financial services include everything from credit unions and financial advisors to insurance companies and investment agencies. Moreover, the industry doesn’t just serve individuals, but also small businesses and large corporations.
What Are Different Types of Financial Services?
The broadest definition of financial services includes all activities that relate to the management of money. In this sense, financial services cover activities like direct savings and lending, investment and insurance as well as the redistribution of risk. These activities can be conducted by for-profit as well as nonprofit entities. However, the bulk of the financial services industry consists of for-profit financial firms.
When it comes to direct saving and lending, the banking industry is the foundation of financial services. Banks provide a place for consumers to hold their checking and savings accounts and also offer services like mortgages and personal loans. Banks earn their money from fees, commissions and the difference in interest rates between loans and deposits. In addition, they may earn from the payments made to them through their debit and credit cards.
In recent years, great strides have been made toward financial inclusion, and 1.2 billion adults now have access to a bank account. This is the result of advances in digital technology and the availability of new forms of payment that are not reliant on a bank branch or cash. This growth has helped to increase the availability of financial services and has improved people’s quality of life.
Another part of the financial services industry involves brokerages, which provide investors with opportunities to invest in stocks and other securities. These firms also perform other functions such as facilitating the transfer of funds between accounts and acting as intermediaries between other financial services providers and their customers. Other members of the financial services industry include mutual fund companies, private equity firms and venture capital providers.
It is important to note that while some financial service companies are for-profit, there are plenty of nonprofit organizations in the field as well. These entities often provide services that are essential to society, such as providing counseling for debt issues or offering money management advice. In addition, they can provide valuable experience and training for those who are looking to enter the workforce.
A career in financial services can be very rewarding, especially since the sector is incredibly broad. However, before embarking on a career in this field, it is important to understand the ins and outs of each aspect of this industry. While a degree is typically required to land a job in the sector, it is not always necessary for success. In some cases, strong interpersonal skills and an ability to quickly solve complex problems can be more important than a degree in this field.