Financial services is an industry that includes banks, credit unions, credit-card companies and insurance firms. The industry provides consumers, businesses and governments with a wide range of products and services. Some of these services include savings and checking accounts, money market and mutual fund investments, insurance, stock and bond brokerage, loans and mortgages, and investment advice. It also includes global payment systems, such as Visa and Mastercard, and the securities exchanges that facilitate stock, derivative and commodity trades.
Financial services are essential to the economy because they allow people and businesses to save money and access credit. They also help people invest in projects that create jobs and grow the economy. These services provide the means for poor families to buy land, build and repair homes, purchase livestock and consumer durables and expand their small businesses. Many of these services depend on trust. Savers and borrowers must trust that financial institutions will not steal their money or cheat them on loan agreements. For example, purchasers of life insurance expect their policies to pay out in the event of their death.
The financial services industry is highly regulated. This can be a good thing, as it protects consumers from fraud and other misdeeds. However, it can limit innovation and the growth of new ideas. As a result, financial services are often seen as a sector that is slow to change.
Almost everyone needs financial services at some point in their lives. The demand for these services grows as economies and populations grow. Providing these services requires a variety of skills, which is why the industry employs a large number of people. In addition to traditional bankers, brokers and mortgage lenders, it includes a wide range of other professionals.
The industry’s primary function is to channel cash from savers to borrowers. This is done by aggregating and monitoring savings, managing investments, distributing risk, and providing advice and information. Financial services also provide critical utilities, such as clearing houses for international payments and settling debts.
A career in financial services can be lucrative and rewarding. Many financial services companies offer on-the-job training and promote from within based on merit rather than seniority, so it is possible to get ahead quickly in this field. In addition, new tools are introduced to the field seemingly every day, so employees in this field must be able to adapt quickly to stay competitive.
One downside of a job in financial services is the stress. It is not uncommon for people in these positions to work 16 to 20 hours a day, and a work-life balance may be difficult to achieve. In addition, regulations in this field are often reactionary and can hinder innovation and growth. For these reasons, it is important to weigh the pros and cons of a career in financial services before making a decision.