Financial services are the processes that people and businesses use to manage money. They include everything from banking to credit cards and insurance. They also help companies raise capital and manage risk.
The financial services sector is the primary driver of a nation’s economy. This is because it provides the free flow of capital and liquidity in the market.
There are three broad categories of financial services: consumer, corporate and investment. These categories cover a wide range of industries, from banks and insurers to credit card issuers and financial technology companies.
Consumer finance helps consumers pay for goods and services, such as paying for a new car or a holiday. It includes credit card firms like American Express and mortgage lenders such as Citigroup.
In addition, there are specialized financial services for different industries. These include credit card machines and networks, debt resolution services, global payment providers, and exchanges for stock, bond, and commodity trades.
Business finance helps businesses acquire funds to expand their operations. This is done through a variety of ways, including loans, factoring, forfaiting and more. It also ensures that companies receive adequate cash to boost production and subsequently reap more profits.
A key advantage of the financial services industry is that it can be a high-paying field, and it often offers a decent balance between work and personal life. This is especially true for those who are independently employed.
The financial services sector is an important part of the world’s economy, which means it has a lot of moving parts. These include credit card issuers and processors, legacy banks, and emerging challengers, all with their own nuances and unique strengths.
Moreover, the sector is rapidly changing due to advances in digital technology and growing consumer confidence. This is a good thing for many, but it can pose a threat to traditional players such as banks.
For example, tech-savvy consumers are more likely to trust big-tech companies over their own bank. That, in turn, is driving the shift to remote services and expanding the use of fintech solutions.
This is an important area for the financial services sector to focus on, as it can make a major difference to the lives of customers. It can help them feel more secure, enjoy better health, and save for the future.
It can also improve customer satisfaction and increase revenue by helping them make more informed decisions about their finances. This is particularly relevant in light of the Covid-19 report, which found that almost half (47%) of UK adults are not confident making decisions about financial products and services.
There is a growing movement towards financial inclusion, with more than 1.2 billion adults having access to a bank account between 2011 and 2017. This has helped millions of people in the developing world, many of whom previously were excluded from formal finance.
Getting more people on the path to financial wellbeing is an essential way that the financial services industry can make commercial gains. The sector can achieve this by building their customers’ knowledge of financial products and services, debt and basic money management. It can also improve customer satisfaction by delivering tailored solutions that suit their individual needs and provide value for money.