Financial services are a broad group of industries that encompass everything from banking to credit cards to investments. These services are vital to our everyday lives because they help people invest in things like homes and cars, secure loans for large purchases, and protect their assets with insurance policies. However, the term “financial services” can be confusing because it includes so many different companies and products. It’s important to understand the differences between a financial good and a financial service before you start looking for jobs in the industry.
Traditionally, each sector of the financial services industry stuck to its own niche. Banks offered checking and savings accounts, loan associations provided mortgages and auto loans, and brokerage companies sold investment opportunities like stocks, bonds and mutual funds. But as consumer demand changed in the 1970s, these sectors began to overlap. For example, banks started offering credit cards while brokerage firms expanded their offerings to include money market accounts. And as technology made it easier to send and receive money, some companies even ditched brick-and-mortar locations altogether and went exclusively digital.
The companies that make up the financial services industry are almost too many to name, but some of the most prominent ones are commercial banks, investment banks, and insurance agencies. Some other financial services companies are debt management firms, credit-card issuers, and payment processing companies. There are also some nonprofit financial services organizations that offer counseling and other money management advice to the public.
Banks provide the foundation for most of the financial services industry. They offer a wide range of deposit and lending services, including checking accounts, savings accounts, and certificates of deposits. They also provide other ancillary financial services such as cashing checks, issuing credit cards, and providing notary services.
Investment banks are a subset of commercial banks that focus on helping businesses raise capital. They do this by underwriting debt and equity for private and public entities, as well as advising on mergers and acquisitions. These companies are often seen as a symbol of American capitalism and serve an important role in the economy by helping businesses grow.
Other companies in the financial services industry provide risk management services, which involve reducing the likelihood of loss and increasing the amount of money that a business can earn. This is done by analyzing a company’s financial records, assessing its debt and equity structure, and developing strategies for growth. In addition, these companies may offer reinsurance and underwriting services to other financial institutions. This helps them make informed decisions about investing in a particular company or product. They may also provide asset management services by purchasing and managing a portfolio of financial assets on behalf of a client. These services are typically provided to high net worth individuals.