Financial services are a huge sector of the economy. They advance loans to businesses, grant mortgages to homeowners, issue insurance policies that protect individuals and property, and enable people to save for retirement or other purposes. Governments often regulate the industry to ensure that consumers are protected and competition exists. These companies also create jobs, and provide significant economic benefits.
Many of these services are essential for an economy to function, but they can also be problematic if not properly managed. For example, credit card companies offer a valuable service by enabling consumers to buy goods and services with borrowed money, but the high rates that many of these firms charge can lead to debt problems. Governments usually regulate the financial services industry to limit these problems.
The most straightforward financial services are those that facilitate payment and transfers between consumers and merchants. These include credit cards, debit cards, electronic funds transfers, and checks. The financial services industry also includes more specialized companies that manage money. These include payment processing providers, which process and settle payments for businesses and consumers, and investment advisors, who provide advice and manage assets for their clients.
Those who work in financial services can also have stressful careers, and burnout is not uncommon for people in this industry. For those interested in pursuing a career in this field, it’s important to network with others and find mentors who can help them navigate the industry. Those who want to become managers should also consider a degree in business administration or finance, which can help them understand the basics of managing money and assets.
While many of the companies in this industry are for-profit, some are nonprofits that offer financial counseling and education to members of their communities. These organizations can also serve as good entry points into the industry, as they give workers the opportunity to gain experience and build their resumes.
One of the biggest challenges facing this sector is providing access to its services to underserved populations. While some companies have been able to increase the reach of their services using digital currency and mobile technology, there are still large numbers of people who do not have access to these tools. The goal is to bridge this gap, and the financial services industry should look at ways to expand its reach using these tools.
The industry is constantly changing, and there are many opportunities for those who are interested in a career in it. Some of the changes are being driven by consolidation, regulation, and deregulation. For example, in the late 1990s, the Gramm-Leach-Bliley Act repealed the Glass-Steagall Act, which had separated commercial and investment banking, allowing banks to offer a broader range of services. These changes have led to a greater level of consolidation, creating bigger financial services conglomerates and increasing the number of job openings. These mergers can also create more competition, which can benefit consumers. They can also make it easier for customers to compare different products and services.