Financial services are economic services that enable individuals and businesses to save, invest, protect their assets and manage their debts. They also facilitate the transfer of money between people and businesses, through credit cards, wire transfers, bank accounts, payment systems, debt resolution services and global trade finance. Financial services include commercial banks, fintechs, credit unions, and pensions providers. They also include insurance companies and debt-resolution agencies.
The presence of financial services helps in the growth of the tertiary sector by making it easier for consumers to acquire various consumer products such as houses, cars etc through hire purchase and leasing. This increases the saving of the consumers and thus encourages investment and production. Financial services also help in the smooth functioning of the capital market by providing different facilities like mutual funds, factoring etc to promote investments and ensure economic dynamism.
Despite the huge strides that have been made by fintechs and other players in this space, many people are still not confident when it comes to understanding their finances. Many have limited knowledge about the benefits and risks of various products they use, are over indebted and lack basic money management skills. This can have serious implications for their financial wellbeing and the economy as a whole.
This makes it more important than ever for the financial services industry to continue building customers’ financial wellness. To do so, they need to work harder to understand and address the key challenges facing their customers – including a widespread lack of understanding of the products they use, over indebtedness and a failure to budget.