Financial services are the companies and agencies that provide businesses, individuals, nonprofits, governments and other organizations with the financial products they need to fulfill their economic goals. These services can include everything from money market and mutual funds to credit card networks, mortgage bankers and insurance agents. The sector also includes debt resolution services, global payment providers and financial market utilities that facilitate stock, derivatives and commodity trades.
The financial services industry is very important to any economy, and it is crucial to the success of individual companies and even entire nations. It is responsible for the movement of money around the world and helps people invest in goods and services, make payments and secure loans. The industry is made up of thousands of depository institutions, credit unions, loan associations, investment firms and insurance agencies. In addition, it includes debt and credit intermediation companies such as financial guaranty associations and brokerage firms. It also includes securitizers and investment banks, leasing companies and hire purchase and finance companies.
As the financial services industry grows, so do the opportunities for jobs and careers within the sector. While the pay isn’t as high as other areas of the business world, it is competitive and there are many positions available for intelligent, quick-thinking professionals who can work well under pressure. Working in this area can be very exciting as it gives you the chance to interact with high-profile clients and build a strong network of contacts that could be beneficial to your career in the future.
While the lines between different sectors of the financial services industry are blurring more and more, it wasn’t always like this. Before the 1970s, each sector stuck to its own specialty. For example, banks provided checking and savings accounts, while loan associations focused on mortgages and auto loans. After the industry began to merge in the 1970s, banks started offering more and more services to their customers like money market and mutual funds. This helped them compete with other financial service companies that were beginning to offer a wider range of options for consumers.
Now, it is common to see large financial services conglomerates that operate in more than one sector of the industry. A company such as JPMorgan Chase offers a variety of services, including investments and lending. This type of integration allows the companies to diversify their risks and attract more potential customers.
Another way that the lines between the different parts of the financial services industry are becoming more and more blurred is through acquisitions. For instance, a bank might buy an insurance agency or an investment firm and keep those brands separate while integrating them into a larger group under the umbrella name of “JPMorgan Chase”. While this may help to protect the brand names, it can also reduce customer service levels. It is also common to see the same companies buying out one another and merging into giant financial conglomerates. The benefits of this can be lower costs, more streamlined operations and more customer choice.