When it comes to financial services, most of us think of banks, stock brokers and mortgage lenders. However, this industry goes far beyond these types of businesses. It also includes credit unions, insurance companies, investment firms and wealth management firms.
In addition, it helps individuals, small and large businesses, non-profit organizations and governments with their financial needs. In this way, it is an integral part of the economy.
As a result, it is no wonder that this sector is thriving. It offers many lucrative jobs and career paths. It also provides stable incomes for employees and a sense of security. These factors make it a very desirable career choice.
Regardless of the type of financial service a company provides, it must always focus on meeting its customers’ demands and staying ahead of competition. This is a challenging task given the rate of technological innovation in this field. For instance, AI, big data and personalization are creating new inroads for startups and pose a threat to legacy institutions that fail to adapt to these trends.
One of the most important things to understand about financial services is that they can be divided into two categories: consumer and commercial. The former includes personal finance budgeting apps like Cleo, which aims to offer reduced overdraft fees and higher interest on savings accounts. These startups provide an alternative to traditional banks, which struggle to meet consumers’ expectations and remain relevant in the digital age.
Commercial financial services, on the other hand, are more specialized. They include underwriting debt and equity for public and private entities to raise capital. They can also aid with corporate reorganizations and mergers as well as initial public offerings (IPOs).
Another area of financial services that is growing in importance is asset management. This is where investment firms manage their clients’ investment portfolios by selecting appropriate assets to achieve their goals and risk tolerance. This is done by using research, analyzing market conditions and implementing appropriate strategies.
Other areas of financial services include securities trading, which involves buying and selling stocks or other investments on behalf of their clients. These companies can also conduct research and analysis of markets to predict future price movements. They can then use this information to assist their clients with investment decisions.
Insurance is a crucial aspect of the financial services industry. It provides protection against various risks including death, sickness, injury and property loss or damage. It is estimated that the global insurance industry is worth over $3 trillion.
The lines between different sectors of the financial services industry have become increasingly blurred over the years. In the past, each sector largely focused on its specialty. Banks offered checking and savings accounts while loan associations provided mortgages and auto loans. Brokerage firms primarily sold mutual funds and other investments while credit card companies like Visa and Mastercard offered only their respective products. Some of these firms have even merged to create conglomerates that offer a wider range of services than they did in the past.