The Financial Services Sector

A healthy financial services sector is critical to the global economy. It allows individuals to get loans for homes, cars, and other purchases; save money for retirement or future expenses; safeguards their property and health with insurance; and gives businesses a way to finance operations and growth. This sector includes banks, credit unions, credit-card companies, and many other financial institutions. It also encompasses debt resolution services, payment processing providers like Visa and MasterCard, and exchanges that facilitate stock, derivative, and commodity trades.

While the banking industry is often thought to be the core of the financial services sector, it actually makes up a small part of this group. Banks earn revenue by charging fees and interest on loans and collecting deposits, while other financial services firms generate income in a variety of ways. These include investing and risk management, the redistribution of risks between investors and lenders, and a variety of other methods.

The main job of a financial services firm is to manage money. This is done by taking in investment capital, providing loans and credit, and facilitating business transactions. It can also provide protection from the unexpected, such as through life or health insurance. It can even help people start a business or acquire an existing one by offering venture capital, or private equity funds.

These financial services can be delivered by professionals or through technology. For example, many consumers now use online banking to monitor their account activity and make payments. Other services are offered through smartphones, such as mobile wallets. In addition, robo-advisers are becoming increasingly popular, as they offer low cost automated advice.

Despite their importance, millions of people around the world lack access to financial services. Without them, they cannot afford to pay for goods or services, and they are unable to invest in their own businesses and grow their incomes. Financial inclusion has the potential to transform lives, enabling entrepreneurs to build their own businesses and create jobs.

The financial services industry is vast and varied, with more than a million jobs in the UK alone. The sector’s employees work in everything from accountancy to wealth management. The most common role is in a bank or credit-card company, with the second biggest employer being insurers. The other large category is investment services, which includes hedge funds and private equity. Many of these roles require an extensive amount of knowledge about markets and assets, as well as excellent communication skills. There are also several regulatory bodies that oversee the sector, which can add to the complexity of these positions.