Financial services is a broad term that includes a variety of financial industries, from banking and investment management to payments technology and digital banking. The industry is a vital part of the world’s economy and provides businesses and individuals with a number of essential services.
Banking and investment services – The primary function of these sectors is to provide banking, credit and other types of savings and lending facilities for individuals and companies. Banks, credit unions and other entities providing these services earn revenue mainly from the spread of interest rates between loans and deposits.
Insurance – Another important sector of the financial industry, insurance is an integral part of many people’s lives. Professionals in this field offer a range of services, from life insurance to mortgage insurance and even disability income protection.
Other subsectors of the financial industry include: * Financing – These firms provide loans to customers, typically to purchase property and other tangible assets. They may also provide financing to small businesses and nonprofit organizations.
Loans are typically backed by collateral, such as a house or car. This means the lender is protected in the event of default.
Money management – These firms provide clients with money management, investing and tax preparation services. This includes helping small businesses keep accurate records for tax purposes and assisting individuals with personal finances.
Asset management – These firms assist high net worth individuals, such as those who are self-employed or own large corporations. They help clients develop wealth through asset allocation and diversification.
Family office – This type of firm handles high net worth individuals or families with financial plans that are tailored to their needs. These firms may be private or may be a department of a larger organization, such as a bank.
Advisory services – These firms service their clients with financial advisers who serve as both brokers and consultants. This type of service often involves complex planning, such as retirement and estate planning, to name a few examples.
Finance export – This is an increasingly common practice, whereby foreign financial services are offered from a domestic firm to a non-domestic client. Traditionally, these financial services have been handled in domestic banks and brokerages, but with the increasing competitiveness of the industry, some smaller financial centres, such as Bermuda, have developed a role in providing these services to overseas clients.
IT systems – The financial services industry is highly dependent on information technology. Having an up-to-date system is key for making accurate decisions about products and services.
Regulatory bodies – Independent agencies are in place to oversee different financial institutions’ operations, uphold transparency and ensure they treat their clients fairly. Two key regulatory bodies are the Financial Industry Regulatory Authority (FINRA) and the Office of the Comptroller of the Currency.
A career in financial services can be an extremely rewarding one if you’re a skilled problem solver and can work well with others. This is especially true in larger companies, where you’ll be given a lot of responsibility early on.