What are Financial services? They’re economic activities performed by a company in the finance industry. Some examples of these companies include credit unions, banks, and credit-card companies. Financial services are customer-focused and depend on trust to function effectively. Let’s explore each service in more detail. Let’s start with banks. These companies provide a variety of goods and services to their customers. Then, they provide accounts and investments. What’s the difference between banks and credit-card companies?
Financial services are a broad range of activities
The financial services sector encompasses a variety of organizations. Large commercial banks, community banks, credit unions, and other institutions provide these services. Many are also government sponsored enterprises. The financial services industry helps facilitate the exchange of goods and funds, manage assets, allocate capital funds, and monitor managers. Some services generate revenue through interest rates, fees, commissions, and other mechanisms. Generally, financial services companies are customer focused.
They include the goods, accounts, or investments they provide
A subset of financial services is insurance. These services provide protection against loss, liability, and injury. Agents and brokers represent insurance carriers and customers, shopping around for insurance policies. Underwriters assess risk by insuring clients and advise investment bankers on the risks associated with lending. Reinsurers provide insurance to insurers and other financial institutions, protecting them from catastrophic losses. Financial services are important to the economy, and are critical to human well-being.
They depend on trust
A lack of trust can have negative consequences. It can cause economic recession, undermine payments and currencies, and eventually lead to hyperinflation. Trust in financial institutions depends on the people working for them. The financial crisis demonstrated that different levels of trust exist. People often distrust bankers due to their greed for money rather than their interest in clients’ best interests. However, this doesn’t mean that banks are not reliable. There are many ways to measure trust.
They are complex
The financial services industry is highly complex, and many of its processes are antiquated. But a modern approach can bring improvements. There are a variety of careers available that require an understanding of the industry’s complex processes, such as writing about them in an easy-to-understand way. Let’s look at a few of them. Here are some examples of how you can use modern technology to improve financial services. In addition to improving processes, you can also use technology to make financial services more accessible to humans.
They are regulated
Although the U.S. federal government regulates most financial services, there are state and local laws that may also apply to certain types of financial institutions. Non-bank entities, such as insurance and investment companies, may be subject to regulations from both state and federal governments. In some jurisdictions, financial regulation is carried out by a single regulatory agency. In the United States, several government agencies regulate financial services, including the Federal Reserve, the New York Department of Financial Services, the California Department of Business Oversight, and various insurance agencies.
They are a growing industry
There are numerous challenges to scaling the financial services industry. While the industry is recovering from the Great Recession, the future of the sector looks bright, fueled by Millennials’ increasing economic power. As an industry, financial services are undergoing a transition to online and mobile banking. The rapid growth in this sector is also spurring the development of fintech companies. However, statistics on this industry focus on publicly-traded banks, and do not include government-owned or private banks.