Financial services involve a wide variety of businesses, including banks, brokers, mortgage lenders and insurance companies. The industry provides financial services to individuals, as well as small businesses, big companies and nonprofits.
Banking
The primary function of banking is to collect deposits from savers and then pool them for lending. But banks also offer a number of other services, such as investments, insurance, and the redistribution of risk. They are able to do this because they have lots of money to lend, which allows them to shed some risk by spreading it among many clients.
Investments
Investors who want to make their money grow over time can benefit from the services of a financial advisor, whose job is to help them make informed decisions about their assets and invest in the right types of securities. These services are usually more cost effective than if investors tried to handle these tasks themselves.
Insurance
The insurance industry is a vital part of the financial services sector. It involves a range of products, including life, health, property and automobile insurance, as well as annuities and retirement plans. It is important for people to have insurance coverage so that if something bad happens, they will be protected.
Credit cards
Consumers use credit cards to purchase goods and services, pay for utilities and entertainment and borrow money to start new businesses or expand existing operations. These transactions are carried out by a large range of companies, from big banks to small credit card issuers and even emerging challengers such as PayPal and Square.
Brokers
A broker is a person who works with investors to buy and sell shares of stock. They may be an independent broker or work for a brokerage firm.
Buying and selling securities on the stock market is an important aspect of a financial advisor’s business, as it gives them access to a vast array of opportunities for their clients. Some financial advisors also offer other investment services such as trading stocks, bonds and mutual funds.
Payment systems
A payment system provider is an important financial service because they accept and transfer cash between accounts. This includes money transfers through credit and debit cards, checks and electronic funds transfers.
Investments
The investment services industry is a major contributor to the global economy. It is a broad grouping of firms that provide a range of financial services, including investing, securities trading and wealth management.
Banks and other financial services providers earn revenue from fees, commissions, and the spread on interest rates between loans and deposits. The financial services industry is an important economic driver for nations around the world, helping to facilitate the flow of capital and support healthy economies.
Pros and cons of financial services
The pros of working in the finance industry include a high level of responsibility, excellent interpersonal skills and a career that can take you almost anywhere. The cons include a competitive environment and a lack of pay for some roles.