Financial services are the industries that facilitate transactions that involve money, such as banking, insurance, and credit. These sectors are vital for the economy because they provide the means for people to spend their incomes, save for future expenses, and invest in things that earn them a profit, such as businesses or property. The industry includes many subsectors, from debt management to global payment systems. A career in financial services requires intelligence, quick thinking, and a team-oriented approach. Pay is not vast in this sector, but promotions are likely based on merit.
The most visible of the financial services industries are banks and other deposit-taking establishments. These companies act as middlemen between savers and borrowers, collecting funds in savings accounts and other deposit products and lending them to those who need the capital for their businesses or homes. They also offer credit cards, personal loans and mortgages. They evaluate the creditworthiness of borrowers and determine interest rates. Financial services also include brokerage firms, mutual fund companies, and credit unions.
Another group of financial services is private equity and venture capital providers. They supply investment capital to startups in exchange for ownership stakes and a share of the profits. They are crucial for helping new businesses to grow and gain a foothold in the market. These companies are sometimes called “angel investors” because they give their time and resources to help new businesses succeed.
Insurance companies offer a wide range of protection for the consumers. These companies offer coverage against death or disability, against loss of life or assets (such as a car), and against liability from lawsuits. They are also in the business of selling reinsurance to other insurance companies.
In the 1990s, financial deregulation in the United States led to the formation of giant conglomerates that offer multiple financial services. A typical company will have an investment bank, commercial banking arm, insurance company and credit-card issuer. This reflects consumer demand for a single provider of many different types of financial services.