When most people think of the financial services industry, they picture bankers, brokers and mortgage lenders. But this is a vast and varied sector that encompasses everything from insurance companies to Wall Street to community banks and nonprofits. According to Ryan Duitch, president and CEO of Arro, the definition of financial services includes “everything that touches money.” It covers banking, investments and even financial analysis. And it affects not only individuals but small businesses, large companies and the government as well.
A country’s economic dynamism depends on the financial services that it provides its citizens and businesses. These companies are responsible for raising finance and disbursing it to help drive production in all sectors of the economy. Some of these companies include credit-card firms, consumer-finance companies, investment-banking firms, accountancy companies and stock brokerages.
While the distinction between these sectors has traditionally been clear, it’s becoming increasingly blurred. Many of these different types of companies offer multiple services, and many are merging into larger conglomerates to earn a greater share of the market. For example, a large commercial bank may own an insurance company or brokerage firm. This allows it to diversify its income and serve customers better.
There are four key services that make up the financial services industry: banking, investment, insurance and the redistribution of risk. Banking involves direct savings and lending, while investment services include asset management, mutual funds and hedge funds. Insurance is part of the financial services sector because it provides protection against events that could threaten a person’s financial health, such as an illness or a house fire.
As the world becomes more connected, financial services providers will need to provide a wider range of products and services that can support their customers’ needs and demands. They will need to understand their customers’ evolving relationships with money, including how they save and invest, as well as the impact of changing regulations. They will also need to be prepared for a shift towards more open banking and new business models that will challenge the traditional role of financial services providers.
The world of financial services is complex and full of opportunities. But before you start to look for your next role, it’s important to have a good understanding of the industry and what it encompasses. This will help you to choose a career that best fits your skills and ambitions, while also helping you to achieve the financial security you want for yourself and your family.