There are many benefits to financial services. They improve the goodwill of companies and induce diversification. The stock market and derivative markets enable businesses to obtain higher yield. Diversification is important for the development of the entire economy, and financial services help ensure that funds are distributed equally between all sectors. This results in balanced growth, which in turn improves employment opportunities. But there are also some drawbacks. To learn about these benefits of financial services, read on.
Regulatory bodies for financial services oversee banks, state chartered savings associations, and insurance activities. Unlike in many countries, the U.S. banking sector is much larger and more regulated than other sectors. Regulatory arbitrage, in other words, occurs when one body regulates a sector but does not regulate the rest. However, this does not mean that the other body does not have a role. It is simply a matter of scale and the cost of regulation varies among countries.
While many governments regulate banks, regulators are also responsible for overseeing nonbank financial sectors. These agencies have two primary purposes. One is consumer protection, as the government regulates telecommunications and public utilities. The second goal is financial stability. The latter goal justifies a much more extensive regulatory framework. A regulatory body for financial services can regulate the entire industry, or a portion of it. The CFTC is a member of IOSCO, which assesses the financial sector and the cost of regulation.
The recent influx of automation and regulation has seen job roles in financial services change dramatically. While the demand for data analysts, engineers, and other technical roles has remained strong, many executives will find themselves doing more creative work or taking initiative themselves. The corresponding increase in job postings has made this industry one of the fastest-growing industries post-pandemic and after technology. London is the global hub for financial services, with a total of 245,598 professionals, while AsiaPac and the Middle East both gaining steadily.
Career Pathways, developed by IFSE Institute, enables professionals to explore the different job roles available in the financial services industry. The tool is divided into four main categories. Clicking on each of these roles will reveal its description and key skills needed for each role, as well as an estimated salary and recommended training courses. To make the tool more interactive, the IFSE Institute has created videos highlighting popular career options. To help professionals understand the nuances of each role, the Career Pathways website has compiled a list of frequently asked questions about financial services roles.
The business model for financial services has undergone a radical transformation in the past decade. As consumers leverage new digital and non-financial applications to manage their financial lives, traditional banking is disappearing. Traditional banking can easily become an invisible part of another industry’s customer experience. In this age of disruption, businesses must re-evaluate their core business models in order to survive and thrive. Listed below are three key changes that are affecting financial services companies today.
The fundamental challenge facing traditional financial institutions is the disruption from fintech. In particular, incumbent banks are under threat from highly capitalized tech companies that have deep customer connections. Increasingly, these companies are moving into the financial services sector and are redefining how people bank. One recent example is Google’s abandonment of plans to launch Google Plex, a transaction account for Google Pay. It quickly attracted intuitional investors and now has more than $1 billion in outstanding loans.
Competition for talent
The best performing companies in the financial services industry prioritize talent, and recognize the value of recruiting and retaining the best people. The 2022 success drivers will include strategies to address changing preferences in the workforce, as well as how to improve recruiting value propositions. The financial services industry is not alone. Other sectors are struggling with higher-than-normal turnover and the COVID-19 pandemic. To address this, financial institutions must make changes to attract and retain the best people.
In the financial services industry, increasing the diversity of incoming talent is crucial for improving profitability, creativity, productivity, and retention. While UK financial services companies have historically leaned on talent based within the EU, globalization and changes in regulation are increasing competition. These challenges require companies to rethink their talent management strategies to maintain a competitive advantage. Here are a few strategies for increasing the diversity of your talent pipeline: