The financial services industry is a vital component of a modern economy. It allows individuals to get loans for mortgages, car purchases and home improvements. It lets companies raise capital to expand or finance inventory and production, and it protects people’s property (and health) through insurance. A healthy financial services sector is also good for the economy as a whole, because it allows people to spend more money and buy more goods and services.
There are many different jobs within the financial services industry, from investment bankers and stock brokers to accountants and credit counselors. There are also some jobs that may not be as obvious, such as the ones at PayPal, which processes money by moving it from one account to another. The industry includes all of the services that support these activities, such as customer service and dispute resolution.
Some of the most important aspects of financial services are intermediation and information. Providers of financial services channel cash from savers to borrowers, and they redistribute risk by spreading it among many borrowers or investors. They also provide information by collecting, analyzing and disseminating data. People could perform many financial services themselves, but it is often more cost-effective to pay someone else to do it for them.
Getting started in the financial services industry can be difficult. There are many career options, and some sectors of the industry are more lucrative than others. A person’s qualifications and experience will determine his or her starting point. Some positions require a bachelor’s degree, while others can be attained through vocational school or on-the-job training. Regardless of the entry-level requirements, those who work in financial services usually need strong interpersonal skills.
A healthy and competitive financial services sector helps individuals manage their money. It gives them access to loans and investments, which can allow them to purchase larger homes or cars, or to start businesses. It lets them save for emergencies and retirement, and it keeps their property secure through insurance policies. It also provides them with the means to make payments and transfer funds electronically, as well as with a range of other services.
The financial services industry is complex and consists of many interrelated parts. Some of these include deposit-taking institutions; credit unions, building societies and mortgage banks; money market and mutual fund companies; credit-card companies; and other firms engaged in financial intermediation. Other important segments include insurance companies, securities traders and investors; and those that provide capital formation services, such as private equity funds and venture capital providers. In addition, there are those that provide specialized financing such as leasing and hire purchase firms, as well as those that offer personal or consumer credit. There are also firms that provide custodial and depository services, settlement and clearing, and information processing and data management. The definition of “financial services” varies by country, as do the specific institutions and organizations that constitute it. However, the broader approach is generally consistent with the international organization International Monetary Fund’s classification of financial services as those that “contain embedded market-based functions.” In this context, they encompass all those activities aimed at providing economic value.