When you think of the financial services sector, your mind might immediately go to investment banks and Wall Street, but there is much more to it than that. The financial services industry is actually quite broad and includes everything from credit unions to community banks, and even nonprofits that provide counseling and money management advice. Financial services are the initiatives and transactions undertaken by businesses, governments, and individuals as they seek to further their economic goals through the inflow and outflow of money. Individuals engage in financial activities when they buy and sell products, make debt repayments, and save or invest money. Similarly, companies engage in financial activities when they issue shares, raise funds, and borrow money. Moreover, government agencies engage in financial activities when they collect taxes and levy debt, all of which further specific monetary objectives.
The health of a country’s economy depends, in part, on the financial services sector. The more robust it is, the better the economy will be. When the financial services sector is weak, however, it will have a negative impact on the overall economy. Therefore, it is important to understand the various components of this industry.
Some of the main functions of financial services include:
Banking services – These provide customers with access to a variety of transactional tools and facilities, such as account opening and maintenance, cash management, wire transfer, currency exchange, and credit card payment networks and machines. These institutions also offer a wide range of other banking services, such as merchant and consumer credit financing, factoring, and hire purchase finance.
Capital markets – These are the venues that allow people to buy and sell securities, such as stocks and bonds, that represent ownership stakes in corporations. A vibrant capital market is indicative of a healthy economy, as it allows for companies to acquire the necessary funding to grow and increase productivity.
Insurance – This is one of the most common forms of financial services, and it helps individuals manage risk by paying into an insurance policy that protects them against unexpected events and losses. Some of the most popular types of insurance include life, property, and liability insurance.
The reinsurance market is another component of financial services, and it offers insurance to the insurers themselves in order to reduce their exposure to risk. Financial services also include credit rating agencies, which assign ratings to entities based on their past performance and future potential.
Financial services are complex, and there is a huge amount of opportunity within this industry. As new tools and technology are introduced constantly, it is important to have a strong education and an in-demand skill set if you want to be successful in this sector. Phyton Talent Advisors works with many professionals in the financial services field, and we know first-hand that it can be an extremely rewarding career path. To learn more about the opportunities available, contact us today!
