Financial services is an industry that encompasses several subsectors all centered on money management. It includes a broad range of activities and companies, from the depository institutions that manage savings and deposits to the investment firms that provide equity and debt capital to businesses. It also includes a variety of intermediaries that help channel cash from savers to borrowers and redistribute risk.
In a simpler sense, financial services are the tools and instruments that allow people to buy and sell goods and services. This can include everything from mortgage loans, insurance policies, and securities to credit cards and remittance services. The sector is a powerful economic force that influences other sectors, such as manufacturing and real estate by the practices, standards, and regulations it establishes.
If you’re interested in working in the financial services industry, be sure to research and identify which subsector (and segment) is the best fit for your skills, personality, and career goals. Then, once you have a solid understanding of the industry, start building the necessary relationships to get your foot in the door. You may not even need a formal education to break into the industry; depending on the position you’re seeking, an internship or entry-level role could be enough to give you the hands-on experience you need to make a difference.
Financial services are also the backbone of a nation’s economy. They facilitate the transfer of funds between primary, secondary and tertiary industries, which in turn fuels economic growth. These services also provide an avenue for budding entrepreneurs to start their own microenterprises and create jobs for the rest of the community.
One of the most well-known kinds of financial services is insurance, which provides a safety net for individuals against the risks of death, injury, illness, property loss, or other unforeseen events. It’s a crucial part of the financial system and helps consumers avoid taking on too much risk, which can be very detrimental to their well-being and that of the economy as a whole.
Other important types of financial services are investment services, which enable people to invest their money in stocks and other assets. These investments can lead to higher returns over the long term. They also reduce the risk of putting all of one’s money into a single asset, which can be disastrous in case of a market crash or natural disaster.
There are also other kinds of financial services, such as remittance services, which aid migrants in sending money home to their families, and debt resolution, which assists those who have fallen behind on their repayments. Finally, there are financial market utilities, which are organizations that support the functioning of the financial services industry. These include stock exchanges, clearing houses, derivative and commodity exchanges, and payment systems.