Financial services are needed to help us spend wisely, put our money to work and reap rewards besides safeguarding our assets. While most people associate this broad sector with Wall Street and hedge funds, it extends far beyond them to include small community banks and even nonprofits that provide counseling services. The industry touches everyone, and while there are many positions available, not all of them pave the way to a high-ranking career.
Financial service firms are highly regulated and operate on a macroeconomic scale that influences domestic politics and foreign relations. In the past, this has often been a point of contention in Western countries, as seen with the Occupy Wall Street civil protest movement in 2011 in the United States. This extragovernmental clout also places the industry in the bull’s-eye of attack, and it must invest in proactive monitoring and business continuity/disaster recovery solutions to avoid major losses.
The various sectors that make up financial services include banking, credit unions, investment banks and more. The bulk of the activity in this sector focuses on direct saving and lending. Banks earn revenue through fees, commissions and spreads on interest rates between loans and deposits. Credit unions and community banks offer similar services but on a smaller scale.
Other firms in the financial services sector include brokerage companies, which act as middlemen between buyers and sellers to facilitate a transaction. This generates a brokerage fee for both parties. Investment banks are a type of financial services firm that provides a variety of advice to clients, including mergers and acquisitions. They also offer capital to private and public entities in exchange for a stake in the company.