When people think of jobs in the financial services industry, they often envision investment bankers or loan officers. But in fact, the industry encompasses many different types of positions. It includes everything from credit card companies and global payment networks to debt resolution firms and insurance agencies. It also encompasses investment and commercial banks, as well as private equity firms and venture capital providers. This broad category of business service sector firms is vital to healthy economies worldwide.
The industry’s most visible component is banking. People use banking to store money, invest it, and purchase goods and services. A healthy economy needs a strong banking sector to support consumer confidence and purchasing power. It is a major driver of economic growth and prosperity.
As a result, the industry is highly complex and diverse. A number of factors have influenced its evolution, including deregulation, globalization, and recent financial crises such as the subprime mortgage crisis in the United States.
A key aspect of financial services is the ability to offer investors a wide range of investment products. This includes stocks, bonds, and mutual funds. It also includes private equity and venture capital firms, which supply capital to startup companies in exchange for a stake in those businesses. It also includes brokerage firms, which provide individuals with access to buy and sell stock shares on the public market.
Another key aspect of financial services is lending, which can be used to finance both large and small purchases. Lenders can provide personal loans, home mortgages, and small business loans. They can also provide short-term cash advances and credit cards. A lender’s creditworthiness is an important factor in determining its lending decisions.
There are also numerous other financial services, both expected and unexpected, that make up this vast industry. Ryan Duitch, president and CEO of Arro, points out that financial services include “everything that touches money,” from investing to credit cards to real estate. For example, he says, the emergence of digital finance has enabled billions of people to become financially included for the first time by getting access to bank accounts.
A big part of financial services involves regulation, with independent agencies designated to oversee various industries and uphold transparency for consumers. Examples of regulatory bodies in financial services include the Financial Industry Regulatory Authority (FINRA) and the Office of the Comptroller of the Currency. In addition, there are a number of conglomerates that offer financial services in multiple sectors, such as banks that offer both investment and commercial banking. This allows them to expand their customer base and increase profitability by offering a variety of products and services. This type of expansion is often done to respond to changes in the market or to meet changing consumer demand.