The Financial Services Industry

Financial services

While many people think of banks, mortgage lenders and credit card companies as entirely separate entities, they’re actually all part of the same industry: financial services. It’s an expansive industry that encompasses more than just direct savings and lending; it includes investing, insurance and the redistribution of risk. It also provides small businesses, large companies and even the government with essential capital for growth and expansion.

Banking is the cornerstone of financial services. It includes handing over deposits to checking and savings accounts as well as giving out loans, which earns interest for the bank. The industry is further broken down into retail and commercial banking, with the latter providing accounts and credit services to business owners.

Another crucial sector of the financial services industry is investment banking. While investment banking deals with the issuance of shares and bonds for funding, it also offers advisory services to clients in addition to offering trading on stock markets and acting as market makers on the exchanges.

Regulatory agencies also play an important role in the industry, and are tasked with ensuring transparency and adherence to rules and regulations. The industry is also home to independent firms that offer auditing and tax preparation services, credit rating agencies and debt collection services. It’s a lucrative and high-growth area that offers plenty of career opportunities for those who are qualified.

A good way to break into the industry is by leveraging your network. Having connections that can vouch for your skills and character will increase your chances of being hired for an entry-level position at a company in this field. Once you’ve gained some experience, you can apply for more senior roles or move into other subsectors of the industry like asset management.

Other subsectors in financial services include private equity funds and venture capital providers, which supply investment capital to startups and small businesses in exchange for ownership stakes or profit participation. This type of financing is often sought out by tech companies, but it’s not limited to the sector. Angel investors are independently wealthy individuals who seek out small businesses and startups for investment opportunities.

Hire purchase finance and housing finance are some of the other services offered by financial services to consumers. These help them purchase consumer products and improve their standard of living. In turn, this helps the economy grow and boosts employment opportunities in the tertiary sector.

The financial services industry is vital for a country’s economic development. Without it, a country’s GDP would be lower and its citizens’ quality of life would suffer. Moreover, it promotes investment, production and saving. These are the building blocks of any country’s economy. The tertiary sector grows when the secondary and primary sectors are well-developed, and that is only possible with an efficient financial services industry.