Financial services are the business activities that help individuals, businesses and governments manage their money. They include everything from banking and lending to insurance and investments. When these business areas are strong, the overall economy tends to thrive. But when these activities falter, it can create a recession. That’s why this industry is so heavily regulated and overseen by various government agencies.
When most people think of the financial services industry, they immediately think of banks, brokers and mortgage lenders. However, this business sector actually encompasses a lot more. It includes Wall Street, small community banks and even nonprofits. It involves investors, securities traders and financial advisors as well. It also covers all aspects of money management, including debt resolution, credit card services and global payment networks. This field is not only highly specialized and competitive, it is extremely diverse.
There are four major categories of financial services: investment services, banking, insurance and consumer finance. Investment services, for example, help clients invest their money by evaluating the risk and reward of different assets and equity investments. This category also includes asset management, private wealth management and trust services. Banking, on the other hand, is an essential part of the financial services industry and includes both deposit services (handing over cash in checking and savings accounts) and credit services. Banks typically lend out some of the money they collect as deposits by offering loans to customers. About 10% of the funds deposited into banks must remain on hand, but most of it can be used for loans, which are usually secured by collateral such as real estate or other assets.
Another important aspect of the financial services industry is credit cards, which have become one of the most widely-used forms of payment. Credit card companies are responsible for issuing cards to consumers and managing credit card payment systems that enable transactions to occur quickly and securely. This industry also offers a wide range of consumer debt solutions, from counseling services to bankruptcy assistance.
The financial services industry is a crucial component of any country’s economy. This is because it handles the inflow and outflow of money that fuels all other economic activities. When this industry is healthy, it helps boost economies and when it fails, it can pull down entire nations. Because of the importance of this sector, it is heavily regulated by government agencies to ensure that business practices are ethical and fair for all parties involved. This is why it’s so important for prospective financial services professionals to have strong connections and references, as well as to start out at entry-level positions that provide hands-on experience and allow them to learn from the best in the business. Phyton Talent Advisors works with professionals in this industry every day, so we understand how crucial it is to get a great start and continue to learn as you grow in your career. Contact us today to learn more about open roles in the financial services industry!