Financial services is a massive industry that includes everything from banking to investments. It’s also a vital part of the economy, and it influences other industries in terms of their practices, standards, and operations. In addition, it’s a powerful economic force that influences global markets.
While the sector may seem all-encompassing today, it wasn’t always that way. Before the 1970s, each sector of the financial services industry stuck to its own specialty. Banks provided a place for consumers to hold their checking and savings accounts, while loan associations offered mortgages and auto loans. Brokerage companies offered investors investment opportunities in stocks, bonds, and mutual funds. Credit card companies offered their brand of credit cards to consumers.
As times changed and consumer needs evolved, however, the lines between these sectors began to blur. In response, banks expanded their offerings to include the products that consumers wanted. And as a result, some companies began to merge, making them giant financial conglomerates that now offer all sorts of services.
One of the most important aspects of financial services is that it helps consumers save money. It encourages consumers to spend less and save more by allowing them to purchase goods and services on credit. Financial services also help promote domestic and foreign trade. This is because factors and leasing companies allow manufacturers to increase sales in the domestic market and sell to foreign companies by providing finance.
The next area of financial services involves asset management. This is where pensions, insurance assets, hedge funds, and mutual funds are managed. Moreover, it helps people manage their personal finances. Banks use their data to identify key life events for their customers and provide a product or service that is relevant for those moments. They also look at customer engagement with other products and spending patterns to anticipate future milestones.
A third area of financial services is treasury management. This is where companies manage the flow of cash for a company and assist with debt financing, equity funding, mergers and acquisitions, and other capital markets activities. It also supports the liquidity of a company, which is how much cash it has on hand.
There is also financial advising, which helps individuals and businesses manage their finances. This can include investment due diligence, M&A counselling, valuation, real estate consulting, and risk advisory services. Several companies, from small domestic consulting firms to huge multinational corporations, offer these services.
To begin a career in financial services, you will need to obtain the right education and skills. While a bachelor’s degree is helpful, it’s not necessary for many roles in the industry. Instead, a strong network is often essential in landing a job, especially in the highly competitive world of investing. In addition, gaining on-the-job experience is also valuable. This will help you gain a better understanding of the industry and improve your chances of success. Lastly, it’s important to consider the different areas of financial services and their unique requirements.