The financial services industry is a huge sector that encompasses a wide range of professionals and businesses. It’s important to understand the role each one plays in your financial life and in the wider economy.
When you hear the term “financial services,” you may think of banking, investment, insurance and more. The financial services sector is a vital component of the economy, supporting both businesses and consumers. A strong financial services sector can drive a country’s growth. However, if the industry falters, it can lead to economic turmoil and even recession.
Despite the many different types of financial services, they all share several common characteristics. They work to provide a service that helps people save money, invest their funds and manage their debt. This includes things like brokerage companies, credit card companies and mutual fund companies.
While it may seem that the financial services industry is all-encompassing today, it wasn’t always this way. Before the 1970s, each sector of the industry stuck to its niche. Banks offered checking and savings accounts, mortgage companies provided loans for homes and cars, and credit card companies provided credit cards to customers.
Those who are in the business of providing financial services also offer other types of services, such as debt resolution, credit counseling and payment services. These third-party companies help consumers get out of debt by negotiating with creditors to pay less than what’s owed, without affecting credit scores. They may also offer payment services to retailers by allowing them to accept credit and debit card transactions in exchange for a percent of the transaction.