When a person is buying anything, whether it’s a car or a home, there are many things that must be done to make the transaction happen. That includes financing the purchase and all the activities that go into securing that financing. This is where the financial services sector comes in. Financial services is a term that refers to all the companies and entities that provide financial products and activities. This includes everything from banks and credit unions to investment firms and insurance companies. This industry also includes critical financial market utilities like clearing houses, derivative and commodity exchanges and payment systems.
The main components of the financial services industry vary by country, but the major players are generally the central bank; depository institutions (including commercial, savings and loan companies); credit intermediation organizations, such as mortgage banks, building societies or credit cooperatives; insurance and pension funds; and credit and leasing companies. These are often referred to as the “Big Four.” In addition, there are thousands of other financial service providers that provide investments, insurance, loans and other credit and financing related activities.
As the world has become increasingly interconnected, so have the financial services industries. This has lead to the development of an increasingly complex array of financial services, such as securitization and structured finance. It has also led to the growth of multinational, multi-service financial conglomerates. In the United States, this trend was accelerated by the Gramm-Leach-Bliley Act of the 1990’s, which repealed regulations such as the Glass-Steagall Act that separated commercial and investment banking.
Ultimately, the most important aspect of the financial services industry is the intermediation of money. This involves taking the cash that savers have and channeling it to borrowers who need it. It also includes redistributing risk by pooling money from many depositors and investing it with the hope of making a profit, or insuring the investments of individuals and companies that can’t afford to bear all the risk themselves.
People could handle many of these functions themselves, but it is much more cost effective to pay someone else to do it. Technology has also changed the way this industry operates; for example, clients can check their bank accounts online at any time, and brokers can now look up information on potential investments more quickly and accurately.
A career in financial services is rewarding for many reasons, including its high starting salaries and excellent opportunities for advancement. Phyton Talent Advisors works with professionals in the financial industry every day, and they tell us that it is an excellent choice for those who want to be in control of their own financial destiny.
If you are considering a job in this field, be sure to talk with your family and friends before making any decisions. This is a very competitive industry, and it will take commitment and hard work to advance in it. However, if you are ready to put in the effort, you can make an amazing impact on your own financial future as well as the financial security of those around you.