Financial services are companies and organizations that provide a wide range of products and services to consumers, businesses and other institutions. These products and services include credit and debit cards, banking, investment brokerage, insurance, as well as global payment systems. These companies also administer and facilitate stock, commodity and debt markets. In addition, they provide a variety of informational tools and services such as credit reports and ratings. They also offer a variety of wealth management products and services such as trusts, estate planning, and private equity.
The financial services industry is vital to a functioning economy. It provides the channels for savings to be redistributed to borrowers, thereby allowing people with money to spend it on goods and services that improve their lives. It also helps to pool risk, allowing a bank to lend to many borrowers and thus not be crippled by the failure of one or more of them. Financial services can be provided for profit or non-profit. The former includes banks and other deposit taking institutions, and the latter can include investment firms, credit unions, and non-profit organizations that offer financial services.
Despite their importance, many people lack access to financial services. These include households and small-scale entrepreneurs in developing and emerging market economies who struggle to save for a rainy day, borrow funds to expand their businesses, or purchase items like refrigerators, computers and cars. Without these essential services, they are often limited in their ability to participate in the economic growth that fuels consumer demand and contributes to higher standards of living.
The growth of the financial services industry has been spurred by technological advances. The use of computer technology has helped to streamline business operations, enabling customers to check their accounts online at any time and employees to get paid through direct deposits. It has also improved the efficiency of a number of other operations such as the processing of securities and the underwriting of loans.
In the past few decades, consolidation and deregulation have led to the creation of multi-service financial conglomerates such as bank and credit card companies. For example, the Gramm-Leach-Bliley Act of the late 90’s repealed the Glass-Steagall Act, allowing a single bank to offer investment and commercial banking as well as traditional retail and mortgage services.
Another subsector of financial services is insurance. This includes insurance against death or disability, property loss or damage, and liability. This sector is also dominated by large corporations, but independent brokers and agents can serve clients as well.
A career in financial services can be a challenging yet rewarding field for those with the right skills and personality. It requires individuals who are intelligent, quick-thinking and team players. Although a degree is helpful, it is not necessary for most positions. A lot of financial services firms offer entry-level roles that allow individuals to gain experience and advance within the company based on merit. This makes it a good choice for those who are interested in a long-term career in finance.