Financial services are the activities that support the economic goals of businesses, governments and individuals. They include everything from insurance and money management to payments and credit. There are many different types of financial services providers, from credit card companies and payment networks to banks and fintechs. Financial services are increasingly becoming digitized, with both established players and challengers sharpening their technology and offering remote and mobile banking.
A thriving financial sector is crucial for the economy, as it allows people to make investments and loans to businesses, generating growth and employment. It also helps to build customers’ financial wellbeing. Unfortunately, the UK remains one of the most indebted countries in the world and a large number of adults lack basic knowledge about financial products. Financial service providers like banks, fintechs, pensions providers and credit unions can help to change this.
Banking
There are several segments within the banking industry, including retail, commercial and investment. Retail banking is focused on serving consumers rather than corporations, and provides account services such as checking and savings accounts, mortgages and loans. Commercial banking is similar, but focuses on medium-sized businesses and large corporations. Investment banking, on the other hand, is focused on raising funds for companies through capital markets.
Insurance
Insurance is an industry that is familiar to most people, as it offers a safety net for unexpected expenditures. Some of the more common kinds of insurance are health, auto, home and renters’ insurance. This type of financial services is offered by various insurers and regulated by the government.
Other services that fall into the category of financial services are debt resolution, payment recovery and market utilities. Debt resolution is a consumer service that helps people manage their debt and avoid bankruptcy. Payment recovery is a service that assists in recovering money paid to vendors by businesses. Market utilities are a group of services that facilitate the operation of financial markets, such as stock exchanges, derivative and commodity exchanges and payment systems.
Another important aspect of financial services is the tertiary or service sector. This sector contributes significantly to a country’s economy, as it is where most jobs are created. It is also where most of the country’s wealth is generated. Financial services in this sector help to improve a person’s standard of living by allowing them to purchase consumer products like cars and houses through hire purchase and housing finance. It also encourages investment and production, resulting in increased demand and prices which benefit the consumer. In addition, financial services enable backward regions to develop by providing fiscal and monetary benefits through tax concessions and cheaper credit. This helps them catch up with the rest of the country. This is why the financial services industry is so vital to the global economy. It is also why so many people are seeking careers in this field.