Financial services are the economic services provided by the finance industry, which encompasses a wide range of service sector firms that manage money, including credit unions, banks, credit-card companies, insurance providers and investment management firms. Financial services help individuals, businesses and governments manage their finances and invest in projects that support growth. This is a key driver of sustainable development, as it enables people to become more resilient in the face of unexpected events and to better manage risk by saving for future needs.
Financial service providers play an essential role in society by enabling access to capital for businesses and individuals. In addition, they facilitate the exchange of goods and services through payment systems and by enabling consumers to make debt repayments. Financial services also help people save and build their wealth by offering investment products like retirement plans, mutual funds and life insurance.
Banking is one of the most common financial services and includes activities like handing deposits into checking and savings accounts, providing loans to customers, and selling investment products such as stocks and bonds. A key aspect of banking is maintaining adequate reserves to meet legal requirements and protect the interests of depositors.
The securities industry includes brokerages, exchanges and clearing houses that trade shares, derivatives, commodities and currencies. These firms provide a vital link between investors and companies that raise capital through the public markets. Securities firms also offer research on companies and markets to their clients.
Credit-card companies, such as Visa and Mastercard, are a subset of the financial services industry and offer a convenient way for consumers to pay for goods and services. These companies also provide a variety of other services, such as debt resolution and card network services.
Another important component of financial services is asset management, which involves managing pensions and other investment assets for individuals and corporations. This sector also includes investment banking and advisory services.
Other important areas of the financial services industry include mortgages, private equity and venture capital, and commercial real estate. These sectors help companies obtain the funding they need to grow and expand their operations.
Lastly, the payments industry offers an array of services that enable people and businesses to transfer funds securely. These firms provide infrastructure services such as global payment networks and interbank settlement systems, as well as merchant account services that allow businesses to accept debit and credit cards.
The global financial services industry is growing fast and offers a huge opportunity for those interested in making a difference in the lives of millions of people around the world. In order to thrive, the industry must ensure that all people can enjoy financial wellness. This means that more people must have control over their money, be able to save for the future and afford basic necessities.
In order to achieve this, the financial services industry must continue to innovate and evolve. For example, new technology like blockchain is transforming how we manage our finances. It can reduce costs for financial services and improve security by allowing people to track transactions in real time. It can also empower women by addressing normative barriers that keep them from achieving financial inclusion.