Essentially, financial services are the tools and processes that help people manage their money. This is a broad industry that covers everything from loans and investments to payments and digital banking technology.
The sector is made up of depository institutions, investment firms, credit and lending organizations, insurance companies and others that engage in financial intermediation. It also includes financial utility providers and other business services that support the finance industry.
Depository institutions take in funds from savers and then use those funds to make loans to borrowers. Investment firms offer investment products such as stocks and bonds, as well as advisory services. Credit and lending organizations extend capital to businesses and individuals in the form of credit cards, lines of credit and mortgages. Insurance companies provide a wide range of insurance products including life, health and property insurance. And banks offer deposit products like checking and savings accounts, as well as loan services such as commercial and mortgage banking.
As the world becomes more complex, financial services firms are under increasing pressure to adapt. This means they must offer better ways to save, invest and borrow. It also means reducing risk and providing more efficient, streamlined service. This is especially challenging because of increased regulation and consolidation. For example, since the market collapse in 2008, many financial services companies have been acquired by larger competitors. This can create challenges because it often means employees must relocate and change jobs.