Financial services are the business activities that enable people to create wealth, invest funds for a variety of periods, transfer risk, and manage savings and consumption. They also provide crucial support to businesses and entrepreneurs, enabling them to expand their operations and access credit and capital markets. Without the financial sector, economic development would be stunted.
The financial industry is a complex beast, with many moving parts and stakeholders. Often, the term “financial service” is used to refer to a financial good itself – a loan or insurance policy, for example – rather than the transaction that secures that good. However, it is important to make a distinction between the two; a financial service is not necessarily synonymous with a specific financial product but the entire process of obtaining one.
There are three broad categories of financial services: banking, capital markets, and asset management. Banking services include deposit-taking (including savings accounts and checking) and lending. They can also include payment systems like credit and debit cards, and corporate finance and investment management. The latter involves assessing and managing the assets of high-net-worth individuals or companies in exchange for a fee.
Capital markets services encompass debt and equity securities, the derivatives market, and other equities such as venture capital. They are typically more complex and involve underwriting, advising on mergers and acquisitions, and arranging structured finance.
Another key category of financial services is insurance, which protects against a range of risks including death or injury (life, health, and property insurance), the failure of a business or an organization (business and general liability insurance), and the loss of assets (e.g., through natural disasters or fire). Financial services providers offer a wide variety of insurance products, from life and disability to automobile, homeowners, and earthquake insurance.
Financial services have become increasingly digitized, with traditional banks and challengers alike offering mobile apps to manage money from anywhere in the world. These technologies offer increased convenience and accessibility for customers, while also reducing costs for the firms involved.
Choosing the right financial services for your needs requires careful consideration. Look for a provider that prioritizes customer service and security, and regularly reassess your choices to ensure they align with your goals. By working closely with your chosen provider, you can build a solid foundation for achieving your financial goals and aspirations. In this industry, it’s often not just about what you know but who you know, so don’t be afraid to network and keep your ear to the ground for the latest opportunities. After all, the City is full of movers and shakers who might just be your next big connection!