Financial services are everything that touches money: from saving and investing to ensuring our houses, cars and health are covered by insurance. A healthy financial services sector is vital to the economy: it allows individuals to borrow money for a home, a car or a business; helps businesses grow by providing capital in loans and equity investments; and protects personal assets by offering insurance against loss and harm (e.g., life, property and health insurance).
While most people know that banks are financial institutions, not everyone understands what exactly makes up this industry. The term is broad and can include for-profit ventures such as investment banks, credit unions and robo-advisers; as well as nonprofits such as community-based organizations that provide counseling or money management advice.
Many of us rely on financial services every day, whether we realize it or not. If we have money in a bank account, it is part of the financial services sector because it is available for loans or withdrawal. If we buy a house or a car, we are using a mortgage or auto loan, which are both types of financial services. If we have debt, it is likely because we borrowed money from a lender, which is also a financial service. If we are able to invest our money wisely, it is because of the work done by stockbrokers and portfolio managers, who are also considered part of this sector.
A healthy financial services sector is essential to our national and global economies. Without it, individuals would have trouble borrowing to pay for homes or vehicles and companies wouldn’t be able to expand. It is also a major employer and provides millions with solid wages that help them meet their financial goals and needs.
If you want to work in this field, be aware that the career paths are highly competitive. You need a strong network to get your foot in the door and you need to be willing to start at the bottom. A typical entry-level position will involve heavy training and mentoring with opportunities to take on more responsibility as you learn the ropes. You will also be expected to perform at a high level since you are dealing with other people’s money.
As the financial services industry evolves, it is facing new challenges and risks. Consumers are demanding more personalized products and services, as technology disrupts traditional business models and increases competition for talent. And regulators are demanding increased transparency, compliance and accountability from financial services firms. Despite these pressures, the industry remains resilient and adaptable. The key to success is to focus on customer needs and deliver innovative and creative solutions that are aligned with their business model and value proposition. Those that do will survive and thrive.