Financial services are a group of economic activities that support people and businesses in managing money. This includes activities like borrowing, saving, investing and transferring funds. It also involves assessing and managing risk. People can choose to perform some of these functions themselves, but often it is more cost-effective and efficient to pay someone else to do so. The industry is extremely complex, and there are many different jobs within it.
A healthy financial services sector allows people to obtain loans for mortgages, cars and other purchases. It also helps individuals save for retirement or other goals and protects their assets through insurance policies. It is a vital part of the economy and supports millions of jobs.
The financial services industry consists of thousands of companies providing deposit-taking, loan and investment services as well as critical financial market utilities. These firms include banks, credit unions, credit-card companies and brokers, investment agencies, insurance providers and more. The sector also encompasses credit-related services such as credit ratings and actuarial consultancy, as well as debt collection and recovery services.
One important function of financial services is intermediation, which refers to the process of converting money from savers into spenders. Providers of financial services can do this by accepting deposits, making loans and lending securities. They can also redistribute risk by, for example, pooling the savings of many depositors to make investments that would be out of reach for individual savers. In addition to this, they may also help to transfer payments between parties.
This intermediation is essential to the operation of markets that allow people and businesses to acquire the goods and services they need to thrive. Without it, economies cannot grow and people cannot meet their basic needs. The sector is also regulated to ensure that the interests of borrowers and lenders are protected.
In order to operate effectively, the industry must be able to channel cash from savers to borrowers efficiently and securely. This requires extensive infrastructure, including payment systems, clearing houses and other intermediaries. It also requires a high level of expertise in financial management. This is why most countries rely on a system of government-regulated institutions that are required to follow strict rules to ensure the integrity of the financial system.
A strong financial services sector is a crucial component of the global economy. It enables businesses to expand, consumers to purchase the goods and services they need and allows people to secure loans for purchases such as homes or cars. It also provides a safety net for people in case of illness or disaster, protecting their assets and giving them peace of mind.
Although the industry can be challenging for new entrants, there are still plenty of opportunities to secure roles that will give you an edge in this competitive field. A good starting point is to build relationships with recruiters and employers that can vouch for your character, skills and experience. From there, it is often possible to progress into more specialized roles as you gain experience and work hard.