The Field of Financial Services

Financial services encompass a broad range of industries, from insurance to money management. As the industry continues to evolve during the coronavirus pandemic, legacy banks and startups alike are sharpening their technology and expanding remote services. As a result, the field is becoming increasingly competitive, but opportunities for finance professionals are also more numerous than ever.

A robust financial services sector is essential to the health of a nation’s economy. It enables businesses of all sizes to grow by providing credit, investment, and debt financing. A healthy financial services industry also allows consumers to borrow money for home improvement, cars, and education, as well as save for retirement and other goals. It safeguards people’s property and lives through insurance, and provides countless jobs with good pay and benefits.

With so many different sub-sectors and job titles, the career options in the financial services industry are almost endless. However, some key points can help those interested in a financial services career determine the best fit for their individual talents and interests.

First, individuals need to understand the basic structure of the industry. It is comprised of several sectors and divisions, each with a specific focus but overlapping in some areas. The sectors are asset management (including private equity, hedge funds, and mutual funds), banking (consumer, corporate, and investment), consumer finance, insurance, and investment banking.

Banks were once the core of the financial services industry, but regulatory changes during the 1970s led to the rise of more specialized financial institutions. Brokerage companies began offering a wide variety of investment products to consumers, while loan associations focused on mortgages and other forms of loans. Credit card companies like Visa and Mastercard were once separate from banks but now provide many of the same services as their competitors.

The various types of financial services available are regulated by independent agencies that oversee the operation of these companies and ensure their transparency. For example, an insurance agent may work for a particular insurer or sell policies from competing insurers. These agents are protected by the Financial Industry Regulatory Authority or the Office of the Comptroller of the Currency.

In addition to these agencies, there are a number of other independent entities that provide services within the financial services industry, including accounting and tax filing, wire transfer services, credit card machine networks and services, and global payment providers such as PayPal. Additionally, there are a number of financial exchanges that facilitate stock and derivatives trading.

The overall goal of the financial services industry is to manage and direct the flow of money for individuals, businesses, and governments. When this happens smoothly, the overall economy thrives. When the industry experiences problems, recessions follow. A strong financial services sector allows people to borrow and invest more money, which in turn leads to greater purchasing power for everyone.