When you think of financial services, you probably envision banks, credit card companies and mortgage lenders. In reality, though, the industry includes many more subsectors than those three. It also encompasses investment funds, stock brokerages, financial advisors and even Wall Street. Those who work in the finance industry make the economy run smoothly, and there are plenty of opportunities for those interested in a career in the field.
The financial services industry is important because it helps facilitate activities that involve money, such as buying and selling goods and assets, borrowing and lending, saving and investing, and making payments. The industry is also responsible for regulating the flow of funds within an economy and between countries. It also creates employment and provides a wealth of other benefits to society.
A healthy and thriving financial sector is necessary for a country to maintain its economic momentum and overall health. Without the proper infrastructure to manage the flow of capital, economies around the world would stagnate and possibly collapse. There are numerous sectors that make up the financial services industry, including credit unions, banks, credit-card companies, insurance agencies, accountancy firms, consumer-finance corporations and private equity funds.
Banks are the heart of the financial services industry, and they offer a variety of different services to their customers. They act as middlemen between savers and borrowers by accepting deposits, pooling them together and lending them out to those who need capital for various reasons, such as starting a business or buying a home. They also provide depository services, such as checking and savings accounts, and they may earn interest on those deposits.
Credit card companies, housing finance companies and hire purchase and leasing are some of the other financial services that enable consumers to buy goods and services that they would otherwise not be able to afford. They also compel consumers to save by offering them incentives like interest-free periods. The financial services industry is also responsible for encouraging the growth of the tertiary and secondary sectors by providing them with the funds they need to expand.
A booming capital market is an indicator of a healthy financial services industry, as it means that investors are confident enough to put their money into riskier investments. This is important because it allows for the growth of new and innovative products that could eventually lead to bigger profits.
Besides the major players mentioned above, other companies that provide financial services include debt resolution services and global payment utilities (like Visa and MasterCard). Moreover, there are also accounting professionals who help small businesses keep track of their finances and tax filings, as well as brokerage firms that assist in stock, commodity and currency trades. These and other smaller companies are a crucial part of the industry. Financial services also include the various exchanges that facilitate stock, derivative and commodity trades. They are a vital part of the economy and provide countless jobs to people around the world.